Himanshu is a content marketer with 2 years of experience in the life insurance sector. His motto is to make life insurance topics simple and easy to understand yet one level deeper for our readers.
Raj Kumar has more than a decade of experience in driving product knowledge and sales in the health insurance sector. His data-focused approach towards business planning, manpower management, and strategic decision-making has elevated insurance awareness within and beyond our organisation.
Updated on Jun 25, 2025 4 min read
An increasing term insurance plan, as the name implies, is a term insurance plan in which the sum assured decided at plan inception rises by a specified amount each year. It's the polar opposite of a declining term insurance policy.
An increasing term insurance plan guarantees that the sum assured grows by a predetermined amount each year. After taking inflation into consideration along with your increasing financial needs that may arise in the future, the sum assured is decided. With such a plan, you have the liberty to increase the sum assured at any point while the policy is still active.
Ideally, increasing term plans come in helpful when achieving financial goals for you and your family at various periods of life. For example, this plan allows you to increase the amount of term insurance coverage after significant life events (such as marriage, birth of a child, etc.).
The premium rate may or may not remain constant during the plan's life. However, the amount of coverage provided by the plan is determined by the health of the insured at the time of the purchase.
To understand this, let us take the example of Devesh. Devesh, a 30-year-old guy, purchases an increasing term insurance plan with Rs. 30 lakh sum assured. He knows what he wants to achieve financially, but he also wants to make sure that his loved ones have enough to achieve their personal goals in the future. He has also calculated the amount of premium he'll have to pay each year to accomplish his target using an online term plan premium calculator.
Every year, the sum assured increases by 5% in this plan. If he purchases a term insurance plan on February 20, 2019, his sum assured on the next policy anniversary (February 20, 2020) will be Rs. 31.5 lakhs, and will continue to rise until it reaches the end of the policy period.
There are several advantages of investing in an Increasing Term Insurance Plan. Some of these are:
Factors | Increasing Level Term | Decreasing Term Insurance | Standard Term Insurance |
Sum assured | Sum assured increases at regular intervals | Sum aussured decreases over time | Sum assured remains constant throughout the policy term |
Who should buy it? | Ideal for those who expect financial responsibilities to increase with time | Ideal for those who wish to cover debts/mortgages or expect their financial obligations to decrease with time | Ideal for those looking for regular source of income after the Life Assured's death |
Young investors will benefit from the rising term insurance plan. Since you begin when you are young, your insurance coverage grows in tandem with your future responsibilities. Additionally, rising term insurance is exactly what you need if you're seeking a life insurance package that can protect you against economic inflation.
An increasing term insurance plan is an excellent approach to obtain financial security whether you have recently started working or if you are self-employed and own a business. This plan provides appropriate coverage to meet escalating financial demands as your obligations and liabilities grow in the future.
However, comparing term insurance policies is critical before deciding which policy to purchase.
Individuals who are young and expect their responsibilities to increase in the future should purchase increasing term insurance. Therefore, always compare the plans first and then choose the plan which best suits your requirements.
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Himanshu is a seasoned content writer specializing in keeping readers engaged with the insurance industry, term and life insurance developments, etc. With an experience of 2 years in insurance and HR tech, Himanshu simplifies the insurance information and it is completely visible in his content pieces. He believes in making the content understandable to any common man.
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