Term Insurance 320 views September 8, 2021

A term insurance plan offering financial support to your family in case of your unfortunate demise is well documented. But what if the payout from your chosen plan falls short of meeting the requirements of your family years later? This is where the increasing term insurance cover can come in handy for your dependents. It’s a plan by which the sum assured keeps on increasing every year without any hike in the premium amount. The sum assured is the amount that your family receives in case you die during the policy term.

Term Insurance

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On this page, we’ll highlight the points that warrant increasing term insurance cover. Apart from that, we’ll also show the term insurance plans that come with impressive increasing cover options. So, let’s get started!

Reasons That Make Increasing Term Insurance Cover a Must-Have for You

An increasing term insurance cover ensures your family meets its financial requirements while letting you enjoy tax benefits on the premiums you pay. Let’s talk about these in greater detail.

Increasing Financial Responsibilities

As financial responsibilities mount with time, you need a greater security cover for your family members in your possible absence. So, choose an increasing term cover that fulfills the surging financial requirements of your family in exchange for an affordable premium.

Inflation-adjusted Sum Assured

You might go wrong estimating your financial requirements if you don’t factor in inflation. Although predicting the nature of inflation is cumbersome, you can at least read the inflation data for the last 5-10 years to gauge the estimated sum assured amount. Currently, annual inflation is hovering around 5-6%. So, assess your requirements by raising inflation estimates by 1-2% every 5 years over the policy term you choose. An increasing term insurance cover will help you achieve that number easily.

Tax Benefits Raise Your Savings

Besides saving your dear ones against the ill effects of inflation, increasing term insurance cover raises your savings by offering tax benefits on the premiums you pay to the insurance company. Premiums up to INR 1.5 lakh in a financial year are exempt from taxes under Section 80C of the Income Tax Act, 1961. But the payout upon your death will be fully tax-free.

No Increase in the Premium Amount

Getting more without having to pay extra will only make you feel good! This is what you get with increasing term cover as pointed out above. The insurance company accounts for the same while offering you such a term insurance plan.

How Does the Increasing Term Cover Work?

Above, we read that the sum assured will keep rising every year when choosing an increasing term insurance cover. Now, we will explain its workings through an example. Doing this will further reinforce the importance of having such a cover.

Example – Ramesh Gupta opts for term insurance of INR 50 lakh with a 6% hike in the sum assured after every year. The policy term is 25 years. The maximum increase is capped to 100% of the base assured amount.

YearSum Assured (In INR)
1st50 lakh
2nd 53 lakh
3rd 56 lakh
4th59 lakh
5th62 lakh
6th65 lakh
7th68 lakh
8th71 lakh
9th74 lakh
10th77 lakh
11th80 lakh
12th83 lakh
13th86 lakh
14th89 lakh
15th92 lakh
16th95 lakh
17th98 lakh
18th-25th1 crore

After the 25th year, the sum assured won’t rise further. The reason being the plan would attain the maximum sum assured capping by then.

Let’s Check the Plans with Best Increasing Term Insurance Offers

There’s no denying the benefits to have with increasing term cover. But if you don’t choose the best plan, you may fail to maximize! So, the key lies in choosing the right plan by comparing different options based on their offerings. Let’s check the plans with impressive increasing cover options.

Term Insurance PlansIncreasing Cover Offers
Max Life Smart Secure Plus PlanThe sum assured can rise after one policy year up to 100% of the base sum assured
iSelect Term PlanThe sum assured rises by 5% every year up to 100% of the base sum assured
Aegon Life Protect Plus PlanThe sum assured rises by 5% every year from the beginning of the 2nd policy anniversary till the life assured attains 55 years of age
Aviva Life Shield PremiumThe sum assured rises by 10% after completion of the 5th policy anniversary. The maximum rise is capped to 50% of the sum assured chosen at inception.
ABSLI Life Shield Plan The sum assured rises by 5% or 10% every year. You will need to choose the rate at inception.

Note – Aegon Life Protect Plus Plan is an increasing cover variant itself. For all other plans, you will need to choose increasing cover at inception.

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