In simple terms, increasing term life insurance is the exact opposite of decreasing term life insurance – the sum insured increases over the life of the policy. The premium may or may not remain the same, but the cover is always based on the health of the insured at the time the policy was originally taken out.
Increasing term life insurance addresses the reality of inflation and/or changing circumstances. It allows the payout to increase over time, the level of which is determined either periodically on a set date, or when an event (e.g. marriage, birth etc.) triggers an increase.
It makes sure that there is a ‘real terms’ or scaled-up payout on the event of death which would be appropriate to the circumstances or the effects that inflation has had since the life insurance policy was originally taken out.