Increasing Term Life Insurance

An increasing term life policy provides a death benefit that changes based on inflation. The benefit grows over time, which can be beneficial for those seeking more coverage. However, premiums may also gradually increase with this policy.

Rachel Christian, writer and researcher for RetireGuide
  • Written by
    Rachel Christian

    Rachel Christian

    Financial Writer and Certified Educator in Personal Finance

    Rachel Christian is a writer and researcher for RetireGuide. She covers annuities, Medicare, life insurance and other important retirement topics. Rachel is a member of the Association for Financial Counseling & Planning Education.

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  • Edited By
    Matt Mauney
    Matt Mauney, Senior Editor for RetireGuide

    Matt Mauney

    Financial Editor

    Matt Mauney is an award-winning journalist, editor, writer and content strategist with more than 15 years of professional experience working for nationally recognized newspapers and digital brands. He has contributed content for,, The Hill and the American Cancer Society, and he was part of the Orlando Sentinel digital staff that was named a Pulitzer Prize finalist in 2017.

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  • Financially Reviewed By
    Eric Estevez
    Eric Estevez, Independent Licensed Life Insurance Agent

    Eric Estevez

    Owner of HLC Insurance Broker, LLC

    Eric Estevez is a duly licensed independent insurance broker and a former financial institution auditor with more than a decade of professional experience. He has specialized in federal, state and local compliance for both large and small businesses.

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  • Published: August 20, 2020
  • Updated: October 30, 2023
  • 4 min read time
  • This page features 3 Cited Research Articles
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How to Cite's Article

APA Christian, R. (2023, October 30). Increasing Term Life Insurance. Retrieved July 15, 2024, from

MLA Christian, Rachel. "Increasing Term Life Insurance.", 30 Oct 2023,

Chicago Christian, Rachel. "Increasing Term Life Insurance." Last modified October 30, 2023.

What Is Increasing Term Life Insurance?

Increasing term is a type of term life insurance that lasts for a specific period, such as 10, 20 or 30 years.

If you pass away during this period, your beneficiary will receive a death benefit from the life insurance company; however, if you die after the term, your beneficiary will not receive anything.

Most term life policies are level, meaning your premiums are stable and the death benefit does not change.

However, the death benefit for increasing term policies get larger over time. This can help offset inflation or protect your growing family.

While your death benefit increases, your premiums may or may not increase as well.

Increasing term life policies are less common in the U.S. than other forms of term life insurance. They also tend to cost more than a level term policy because the potential payout gets larger over time.

How Do Increasing Term Policies Work?

If you purchase an increasing term life policy, the insurance company will offer you a sum assured. This is the guaranteed amount your death benefit will increase each year or period of years.

The sum assured can be expressed as a percentage, such as 5 percent each year, or as a flat rate amount, such as $10,000 every five years.

If the sum assured increases as a percentage, it’s usually a simple percentage and not a compounded rate.

For example, if you purchase a policy worth $250,000 with a 5 percent increasing term, your policy death benefit will be worth $312,500 after five years.

Alternatively, you may purchase an increasing term life policy for 20 years. In the first five years, it offers $100,000, then $250,000 for years five to 10, then $500,000 for years 11 to 15 and finally tops out at $1 million during the last five years.

Some plans limit how much the death benefit can grow. The incremental increase will stop after the maximum limit is reached but your policy will remain in effect.

Even though your coverage increases every year, your policy premiums may or may not stay the same. The insurance company will discuss this detail before your policy is issued.

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Benefits of Increasing Term Life Insurance

Increasing term life insurance may be beneficial if you want extra protection in the future. It can help cover growing expenses, such as a larger mortgage or a bigger family.

Advantages of Increasing Term Life Insurance
Covers Rising Costs
Life can get expensive as you age. You may need more coverage in the future than you do now. If you expect to start a family or purchase a larger home down the road, increasing term life insurance can be beneficial.
Inflation Protection
The value of money decreases over time. Purchasing a 30-year term life policy worth $100,000 today may not be as valuable in the future. An increasing term hedges against inflation by raising the death benefit over time.
Like all term life policies, increasing terms are usually less expensive than permanent life insurance coverage.
No Additional Underwriting
Increasing term insurance allows you to increase your coverage in the future without reapplying to the insurer or undergoing a new medical exam.

Additional Features of Increasing Term Policies

Some insurance companies offer riders, or special features added to your policy at an additional cost.

Riders are typically only available when your policy is first issued, so make sure to explore your options.

For example, an accelerated benefit or disability rider allows you to tap into your life insurance money when you’re still alive but facing a debilitating or terminal illness.

It’s important to note that any money used from an accelerated benefit rider will reduce the money your family receives after you die.

When your increasing term policy is coming to an end, many insurance companies will give you the option to convert to a permanent life insurance policy.

Permanent life insurance never expires as long as premiums are paid. However, the cost is often much higher than term life insurance.

If you want to continue providing for your family, ask your insurer if they offer a conversion option before your term life policy expires.

Last Modified: October 30, 2023

3 Cited Research Articles

  1. Kinney, J. (2020, January 17). What Is Term Life Insurance? Retrieved from
  2. American Council on Life Insurance. (n.d.). Types of Life Insurance. Retrieved from
  3. Life Happens. (n.d.). Term Insurance. Retrieved from