Definition
Increasing Term Cover
Increasing term cover is a term insurance option where the sum assured rises each year by a fixed percentage to counter inflation.
Under an increasing sum assured option, the death benefit grows automatically over the policy term, often by a set percentage of the original cover annually, so the protection keeps pace with inflation and rising family responsibilities without re-underwriting.
The premium is higher than a level term plan because the average cover is larger, and it is usually fixed at the higher level from inception or steps up. It suits buyers whose income and liabilities are expected to grow, complementing the alternative decreasing term used for reducing loans.
Related terms
- Credit Life InsuranceCredit life insurance is a policy that repays an outstanding loan if the borrower dies, disabling the debt from burdening the family.
- Decreasing Term CoverDecreasing term cover is a term plan whose sum assured reduces over time, typically aligned with a falling loan balance.
- Term InsuranceTerm insurance is pure life cover that pays your family a large sum if you die during the policy term, in exchange for a low premium.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.