Cover that grows with your family’s future.
The short answer
Increasing term life insurance pays a lump sum if the insured person dies during the term, and the amount rises each year, usually linked to inflation or a fixed percentage. It helps protect the real value of your cover over a long term. Premiums typically rise as well, so it usually costs more than level cover over time.
Who this cover may suit
- You are taking a long term, such as 25 years or more, and worry about inflation.
- Your cover is mainly for family living costs, which rise with prices.
- You expect your income to grow and want premiums that can grow with it.
- You want a payout that stays closer to today’s spending power.
When to consider another option
- You only need to clear a repayment mortgage — decreasing cover is designed for that.
- You need premiums that never change — level term keeps them fixed.
- Your term is short, so inflation has less time to matter.
How it works
Tell us about you
A few simple questions about your age, health and what you want to protect.
Choose amount and term
Pick how much cover you want, its shape and how long it should last.
Review real options
See options based on your answers, with a real person to help if you want one.
How increasing term cover works
At the start you choose a sum assured and a term, just as with level cover. Each year the sum assured increases — either by a fixed percentage or in line with an inflation index such as the Retail Prices Index or Consumer Prices Index. Your premium usually rises at the same time. MoneyHelper explains how the main shapes of life cover differ. [2] Our cover shapes guide compares all three.
| Increasing | Level | Decreasing | |
|---|---|---|---|
| Payout over time | Rises each year | Stays the same | Falls each year |
| Premium | Usually rises | Usually fixed | Usually fixed |
| Inflation | Helps keep real value | Real value falls | Not designed for it |
| Typical use | Long-term family needs | Income, interest-only mortgage | Repayment mortgage |
Why inflation matters over a long term
Inflation is the rate at which prices rise. The Office for National Statistics publishes the UK’s official inflation measures, and even modest yearly rises add up over 20 or 30 years. [9] A family relying on a payout to cover food, bills and childcare needs it to buy roughly what it would have bought when the policy began. Our cover needs guide shows how to estimate those costs.
Watch the rising premium
Because premiums usually rise each year, check how the increases are calculated and whether you can decline an increase without losing the option in future. Some policies stop increases if you decline more than once. Our guide to term life insurance costs explains what shapes the price.
A young family planning for the long term
Fictional example: Jess, 29, and Owen, 30, a baby on the way and a long-term renting plan. No prices are shown because real premiums depend on underwriting.
- Main need
- Family living costs until the child is around 21
- Cover shape
- Increasing, linked to inflation
- Term
- 25 years
- Trust
- Each policy written in trust for the other and the child
The payout would keep more of its real value over a long term. They accept that premiums will rise and plan to review every few years.
Trusts and tax
A growing payout can push an estate closer to the Inheritance Tax threshold of £325,000. [4] Writing the policy in trust can keep it outside your estate in many cases; HMRC explains how trusts are taxed. [5] See our trusts guide.
Increasing term at a glance
What works well
- Helps protect the real value of your cover.
- Suits long-term needs that rise with prices.
- Can grow alongside an expected rise in income.
What to watch
- Premiums usually rise every year.
- Costs more over time than level cover.
- Declining increases can remove the option later.
The FCA’s market study into pure protection found that competition generally works well, while noting many households remain underinsured. [3] Answer every application question accurately: under the Consumer Insurance (Disclosure and Representations) Act 2012 you must take reasonable care not to misrepresent. [6]
Employer death-in-service cover is valuable, but MoneyHelper notes it usually ends when you leave the job. [7] If a claim is ever disputed, the Financial Ombudsman Service handles complaints about insurers free of charge. [8]
Keep exploring
Frequently asked questions
What is increasing term life insurance?
Increasing term life insurance is a policy where the sum assured rises each year during the term, either by a fixed percentage or in line with an inflation index. If the insured person dies within the term, the insurer pays the increased amount due at that time. The aim is to help the payout keep its real value as prices rise. Premiums usually increase alongside the cover. If the insured person survives the term, the policy ends and nothing is paid back, just as with other term cover.
Is increasing term life insurance worth it?
It can be worth considering if you are taking out cover for a long term and the money would mainly pay for everyday family costs, which tend to rise with prices. Over 20 or 30 years, even modest inflation can significantly reduce what a fixed sum buys. The trade-off is cost: premiums usually rise each year, so you will usually pay more over the life of the policy than for level cover. For shorter terms, or for clearing a specific debt, level or decreasing cover is often a better fit.
How much does increasing cover go up each year?
It depends on the policy. Some increase by a fixed percentage each year, such as 3% or 5%. Others are linked to an inflation index such as the Retail Prices Index or the Consumer Prices Index, sometimes with a cap. The policy documents set out exactly how the increase is calculated and how the premium changes with it. Before you apply, ask how both the cover and the premium will change, and what happens if inflation is unusually high or low in a particular year.
Can I turn down an increase?
Many policies let you decline an annual increase, which keeps your cover and premium at their current level for that year. However, some insurers remove the right to future increases if you decline once or twice, turning the policy into level cover from then on. Check the rules in the policy terms before you buy. If you expect money to be tight in some years, a policy that lets you pause increases without losing them permanently may be more suitable for your situation.
Is increasing cover better than level cover?
Not always. Increasing cover helps protect against inflation but costs more over time. Level cover keeps a fixed payout and usually a fixed premium, which is simpler to budget for but loses real value as prices rise. Some families buy level cover with a slightly higher sum assured to allow for inflation, while others combine a level layer with an increasing layer. The right choice depends on how long the term is, what the money needs to pay for, and how comfortable you are with rising premiums.
Should increasing term cover be written in trust?
It is often worth considering, especially because the payout grows over time and could push an estate closer to the Inheritance Tax threshold of £325,000. A trust can allow the money to go directly to the people you choose, usually without waiting for probate, and in many cases keeps the payout outside your estate for tax. Most insurers provide trust forms at no extra cost. Our trusts guide explains the main types of trust and the questions to ask before choosing one.
Sources
- Association of British Insurers — Protection insurers pay out £7.84 billion in claims in 2025 (2026-06-29)
- MoneyHelper — What is life insurance? (2026-09-28)
- Financial Conduct Authority — MS24/1.5 Market Study into the Distribution of Pure Protection Insurance Products: Final Report (2026-09-21)
- GOV.UK — How Inheritance Tax works: thresholds, rules and allowances (2026-09-28)
- HM Revenue & Customs — Trusts and Inheritance Tax (2010-11-08)
- legislation.gov.uk — Consumer Insurance (Disclosure and Representations) Act 2012 (2012-03-08)
- MoneyHelper — Life insurance through work (2026-09-28)
- Financial Ombudsman Service — Complain about a financial business (2026-09-28)
- Office for National Statistics — Inflation and price indices (2026-09-17)
- GOV.UK — Bereavement Support Payment (2026-09-28)