Increasing life insurance

With an increasing term life insurance policy, your cover amount will increase by a certain percentage each year, (in line with the Retail Prices Index).

For example, with Legal & General Increasing Cover your sum assured can have a maximum increase of 15% each year^[1].

Whereas with Aviva, the maximum amount your cover can increase by is 10%^[2].

To reflect your new cover amount, your premiums will also increase each year, (up to 15%).

If you choose to not accept the increase, your premiums and cover amount will remain the same.

As with any term life insurance policy, you’ll be covered for a specified period of time and a pay out will only be made to your loved ones if you pass away during this time.

As discussed, increasing life insurance is a policy type that will allow your sum assured to increase over time, this is to help protect your pay out amount from inflation.

This can be a good option for those who need a minimal amount of cover at a young age but may need more cover as they go through life.

The guaranteed insurability option (GIO) is a benefit that may be included in some life insurance policies.

It allows you to increase your sum assured should your circumstances change and you require more cover. Premiums will also increase as a result.

Each insurer will have a list of life events where GIO can be used. This list can be found in the terms and conditions of your policy. Often it includes:

• Birth of a child
• Marriage or civil partnership
• Increase in mortgage / rental increase
• Change of employer

You won’t be required to provide any further medical information.

With level term life insurance, your sum assured remains fixed throughout your policy.

This means no matter when you pass away (during the term) your loved ones will always receive the same amount.

Increasing term life insurance allows your sum assured to increase each year - meaning that the later you pass away into the term, the more your loved ones would receive.

Although you may be able to receive a large sum assured with increasing term life insurance, you’ll also need to pay increased premiums each year.

An increasing pay out amount may seem tempting at a young age but it’s likely that the older you are, the less cover you require (meaning this cover option could become costly and unnecessary later on in life).

With level term cover everything remains the same, so this may be a more cost-effective option in the long run.

Most insurers also offer the guaranteed insurability option with their level term policies.

This option allows you to secure more cover without the need to provide any new medical information.

At Reassured we can compare multiple level term life insurance policies from some of the UK's leading providers to help you find your ideal policy.

How long you need your life insurance to last will depend on your own personal needs.

These factors will give you a rough idea of how long your cover should last.

For example, if looking to protect your mortgage, the term of your policy will need to be at least as long as your mortgage term.

However, life can be unpredictable and it can be hard to plan for every life event.

If your circumstances change you may need more cover than you originally planned for.

This is where increasing life insurance could be useful as your sum assured increases each year.

Alternatively, most term or whole of life insurance policies include a ‘life changes’ (guaranteed insurability) option – meaning you only increase your cover amount when you need to.

At Reassured we can compare quotes from some of the UK's leading providers and inform you on which insurers offer the guaranteed insurability option.