- Date : 15/09/2022
- Read: 3 mins
Some term insurance plans offer to increase the life cover annually to take care of inflation, while some give you the option to increase it on occasions such as a wedding, childbirth, home loan, etc.

Certain events in life may require an individual to increase their term plan cover, such as:
- Increase in financial responsibilities: Events such as marriage, childbirth, etc., increase an individual’s financial responsibilities
- Increase in financial liabilities: Events such as home loans, vehicle loans, higher education loans, etc., increase an individual’s financial liabilities.
- Inflation: Inflation is the general increase in prices of goods and services over a period of time, usually yearly. The annual increase in the cost of living requires an individual to increase their term insurance coverage amount annually.
Life insurance companies understand the above events that require an individual to increase their term insurance cover. Hence, some life insurance companies give an option to increase the cover under their term life insurance policy. Let us understand how this works.
Also Read: Term Insurance Vs Traditional Life Insurance: Know The Basic Differences
Increasing cover option
Some term insurance plans come with two variants: a level term insurance plan and an increasing term insurance plan.
- Level term insurance plan: If the life insured opts for this variant, their life insurance cover remains the same throughout the plan tenure.
- Increasing term insurance plan: If the life insured opts for this variant, their life insurance cover increases by a specified percentage every year. The percentage increase in cover may be 5% or 10% every year. For example, let us assume an individual opts for a Rs 50 lakh cover with a 10% annual increment. In this case, the insurance cover will be Rs 50 lakh in the first year, Rs 55 lakh in the second year, Rs 60 lakh in the third year, and so on. The increase in insurance coverage can offset the impact of inflation.
An individual can opt for one of the above options at the time of purchase. The annual premium for the increasing cover variant is higher than the level term variant. However, once the insured person opts for any variant and buys the plan, the premium remains constant throughout the policy term.
Also Read: Should Housewives Buy Term Insurance?
Event-based increase in insurance cover
Some term insurance plans come with an option to increase the insurance cover on the occurrence of certain events, such as:
- Marriage
- Childbirth
- Home loan, etc.
The percentage of increase in cover for each event is specified. For example, a certain plan may allow a 25% increase in cover on marriage and a 50% increase in cover on taking a home loan. The plan also specifies how many times the increase in cover can be opted for a specific event. For example, a certain plan may allow an increase in cover only once on marriage and may allow an increase in cover twice on childbirth (first and second child).
Increase in term insurance cover
An individual can opt for an increase in term insurance coverage only at the time of buying the insurance plan. So, if you wish to increase your term insurance cover annually or in future (based on certain events), make sure you purchase a term insurance plan that provides these options. Be sure to read the terms and conditions carefully before you sign on the dotted line.