Increasing term assurance is where the assured sum rises yearly by a fixed amount or percentage of the original figure. This particular type of policy is useful for when temporary cover of a certain fixed amount is needed, but where that cover needs to increase to take into account some of the decrease in purchasing power caused by inflation.

This type of assurance also gives you the option to renew the existing policy at the end of the initial period for the same sum as previously, without any requirement to provide further evidence of your medical condition.

The new term will be of the same length as the initial term and includes a new renewal option. There is, however, a maximum age limit, typically 65, which means the policy is no longer available from then onwards. The premium for the new policy is based on the policyholder’s age at the date when the option for renewal is exercised.

Both renewable and increasing term assurance are similar to the renewable policy, with an added option to increase by a specific sum upon renewal.

The increase is typically either 50% or 100% of the previous sum assured with, again, no requirements to provide evidence of the medical condition of the assured person.

You will find that some providers offer a combination of renewable, convertible and increasing term assurances.