Term Life Insurance: Level or Increasing?

When choosing a term life insurance in India, many people are confused between increasing term and level term policies. These two types of cover offer distinct benefits depending on your age, life stage, and financial goals. In this guide, you’ll learn the key differences between increasing term vs level term life insurance to help you identify which policy best suits your needs.

When choosing a term life insurance in India, many people are confused between...

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What is Level Term Life Insurance?

Level term life insurance is a traditional form of term cover in which the sum assured remains constant throughout the policy tenure. The premiums amount is fixed when the policy is purchased and will remain fixed during the policy period. This type of plan is appropriate for individuals who prefer long-term stability in premiums and fixed coverage throughout the policy tenure.

Key Features of Level Term Life Insurance:

Fixed sum assured
Constant premium throughout the policy
Lower premiums in the initial years
Appropriate for individuals with fixed long-term financial obligations, such as loan repayments.

What is Increasing Term Life Insurance?

Increasing term insurance is a flexible form of cover in which the sum assured increases over time, usually annually. It is designed to help your insurance coverage keep pace with inflation and rising financial responsibilities.

Key Features of Increasing Term Life Insurance:

Sum assured increases annually by a fixed percentage or rate
Offers better protection against inflation
Useful for younger policyholders or those expecting rising future liabilities.

Increasing Term vs Level Term: Key Comparison

Feature	Level Term Life Insurance	Increasing Term Life Insurance

Sum Assured	Fixed throughout the policy term	Increases over time, either by a fixed percentage or linked to inflation indices
Premiums	Remain constant during the term	Remain fixed in most plans, even as the sum assured increases annually.
Inflation Protection	Not inherently protected; real value may erode over time	Designed to counteract inflation, maintaining the real value of the death benefit
Best Suited For	Covering fixed obligations like mortgages or loans	Anticipated rising expenses, such as children's education or lifestyle inflation
Initial Cost	Generally lower premiums at the outset	Higher initial premiums due to increasing coverage

ACKO Life Flexi Term Plan

The ACKO Life Flexi Term Plan is a unique life insurance option that adapts to your evolving lifestyle. It is packed with useful features and promises to provide your loved ones with a financially stable future, with the amount of money you choose for them.

Here are 6 reasons to choose the ACKO Life Flexi Term Plan:

Adaptable Sum Assured

The coverage amount needed to protect your financial dependents can change over time. This may happen as your number of dependents grows (e.g., having children), as you take on new financial responsibilities (e.g., home, personal, or education loans), or as your lifestyle evolves with changes in income (e.g., a promotion or career growth).

Affordable Premiums

The premiums are fair and friendly to your wallet and offer extensive coverage to stay protected and save on income taxes simultaneously. That's a win-win!

Flexible Policy Tenure

Increase or decrease as your financial dependents, loans, lifestyle, and income change.

Payout Options

Have complete control over how the sum assured will be paid to your nominee (monthly or one-time full payment).

Will Creation Service

Easily create a will to outline which assets go where clearly.

Easy and Convenient

Being digital-first means you can easily buy or make claims on your term insurance policy with us.

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Increasing Term vs Level Term: Which One is Better for You?

The best value comes down to your age, income pattern, inflation expectations, and future goals. For many young Indians, an increasing term plan with inflation-adjusted benefits may prove more valuable in the long run.

Choose Level Term Life Insurance if:

You want predictable premiums
You have fixed financial obligations (e.g., a 20-year home loan)
You prefer lower initial costs.

Choose Increasing Term Life Insurance if:

You're young and expect rising future responsibilities
You want to beat inflation
You can afford slightly higher or rising premiums

Conclusion

Both increasing term and level term life insurance plans serve distinct purposes. While level term offers budget-friendly, stable cover, increasing term life insurance aligns better with inflation and changing financial needs. Evaluate both plans based on your goals and based on current and projected financial obligations.

FAQs on Increasing Term vs Level Term Life Insurance

Do term life insurance rates go up?

In level term insurance, premiums are fixed along with the sum assured. In increasing term plans in India, the sum assured rises over time, but the premium typically remains fixed in most Indian plans.

Which is better: increasing or level term life insurance?

It depends on your needs. A level term is cost-effective and stable, while an increasing term provides growing cover to counter inflation and rising financial responsibilities.

How much does term life insurance increase?

In an increasing term life plan, the sum assured increases by a fixed percentage, such as 5% , 10%, etc., annually, depending on the insurer's terms.

Can we increase term insurance cover?

Yes, some policies and insurers allow for coverage expansion, but with conditions: Alternatively, you can purchase riders or additional policies to supplement your existing plan.

How to increase term insurance cover?

To increase your coverage, you can choose an increasing term policy, add riders or buy a new policy if your existing one doesn’t support top-up features.

Does term life insurance increase every year?

In increasing term plans, the coverage increases, offering enhanced protection each year.

Does term life insurance increase with age?

Yes, in a general sense, term life insurance rates go up with age. When you purchase a new term policy later in life, the premiums are significantly higher. However, if you buy a policy when you're younger and lock in the rate (especially with a level term plan), you won’t face premium hikes later. This is why early purchase is beneficial, as it allows you to enjoy a lower rate for the entire duration of your policy.

At what age does term life insurance go up?

If you’re buying a new policy, term life insurance costs go up incrementally with age. A delay in buying can lead to higher premiums, limited plan options and stricter medical requirements.

What is the premium for term life insurance?

The premium for term life insurance depends on several factors, such as age, health conditions, policy type, sum assured and policy tenure.

Written by Neviya Laishram

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Reviewed by Vaibhav Kumar Kaushik

A senior editor with years of expertise, she fine-tunes content that connects, converts, and builds trust. She transforms heavy life insurance concepts into clear, aha-moment reads. Writing is her passion, and thinking ahead is second nature. When not wrangling words, she’s crushing game levels because every challenge is a puzzle waiting to be solved.