Increasing term life insurance is cover whose payout is raised each year, usually by a measure of inflation, with a premium that rises alongside it. Unlike a fixed sum, the amount covered is not frozen at the start. Which insurers sell it, and on what terms, is a question for an FCA-authorised broker: a few details sent through our enquiry form, free of charge, lead to a call from one.
Below is how three insurers' own documents set out the index, the limits, the premium rule and your right to turn an increase down.
What does increasing term life insurance mean, and how does it differ from level cover?
Both are term policies that pay a lump sum if the person insured dies within the term. On a level policy the sum assured is the same on every anniversary. On an increasing policy it steps up. Scottish Widows' policy summary (January 2026) says increasing cover "is chosen to help protect your policy against inflation", and Aviva's life insurance page (September 2026) describes the idea this way: a level lump sum loses value to inflation over the years, so you can "help protect this lump sum payout against inflation by selecting increasing cover".
The difference that matters most in practice is the premium. Scottish Widows' summary adds that the cost of a level or decreasing policy never changes, while with increasing cover "your premium will increase each year". Legal & General's guide to types of life insurance (19 June 2026) puts the trade in one line for the buyer: "you pay higher premiums over the length of your cover". So you are paying more each year for a sum that rises, rather than a flat sum at a flat price.
Terms such as "index-linked", "inflation-linked" and "indexation" all mean the same arrangement here: the cover is raised by the change in a named price index. This page is about that yearly inflation step, not about choosing to add cover later. For how the basic term product works, see how term life insurance works.
Which index is used, and what are the limits?
It differs by insurer, and that is the first thing to check in any policy. Here are three insurers' terms. Aviva's are in its May 2023 documents, which its life insurance page (September 2026) still links as the current terms:
| Insurer and document | Index | Cover rises | Premium rises |
|---|---|---|---|
| Aviva, Life Insurance Plan conditions (DA03011, May 2023) | Consumer Prices Index (CPI) | By the CPI change, to a maximum of 10% a year; if CPI does not rise, cover stays the same | By 1.5 times the CPI change, to a maximum of 15% a year |
| Legal & General, Life Insurance terms (QGI12849, October 2026, in file QGI14872) | Retail Prices Index (RPI), or a comparable index if RPI cannot be used | By the RPI change; no increase if RPI change is under 1%; no more than 10% a year | By the RPI change multiplied by 1.5, to a maximum of 15% a year |
| Scottish Widows Protect, policy summary (January 2026) | Retail Prices Index (RPI) | At least 2%, up to a maximum of 10% each year | Rises each year, at a higher rate than the cover amount |
Aviva measures CPI over the 12 months ending 12 weeks before the start of the month of your policy anniversary, so the change applied is not the latest inflation figure. Legal & General explains its index in plain terms: "The RPI measures the average change in the price of goods and services. This includes petrol, groceries such as bread and milk, and housing expenses such as mortgage interest payments."
The floors and caps cut both ways. A low-inflation year may bring no rise at all at Legal & General, or at least 2% at Scottish Widows, and a high one is capped at 10% at all three. The cap on the cover is a limit on how closely the sum can follow prices, so in a year when inflation runs above it, the cover amount falls behind.
What does indexation do to the premium?
It pushes the premium up faster than the cover. Aviva's policy summary (DA03008, May 2023) says that with increasing cover the premium goes up each year at 1.5 times the CPI increase, and Legal & General's terms use the same factor of 1.5 on RPI. So when the index rises by some percentage, the cover rises by that percentage and the premium by one and a half times it. Scottish Widows' summary puts no number on it, saying only that the premium rises at a higher rate than the cover.
Aviva's May 2023 summary works one example through, on its own assumptions: a couple aged 34 and 33 with a £200,000 increasing policy for 25 years, paying £20.00 a month. Assuming CPI rose 2.5% in the first year, their cover becomes £205,000 and their premium rises by 2.5% multiplied by 1.5. That is Aviva's illustration, not what any reader will pay and not a guide to other insurers' pricing.
Each year's rise is added to the last, so by the end of a long term the premium can sit well above the first one. How far depends on the index in the years that follow, which nobody can say in advance. Your starting premium turns on age, health, smoking, the amount and the term; a broker's quote, requested through our form, is how to see a figure for your own details.
Can you decline an increase, and what happens if you do?
Yes, at all three insurers, each year, with a catch that differs by insurer. Aviva's conditions say it will contact you "at least eight weeks before each anniversary date" and that if you accept "you don't need to do anything as we'll apply this automatically". On declining:
If you don’t want to pay the higher premium, then, each year, you can choose not to increase your cover amount. If you do this, your cover amount, and your premiums, will stay the same.
Aviva adds that you must tell it as soon as possible before the anniversary, and its summary notes that a yearly increase needs no further health and lifestyle questions. Legal & General gives notice "at least three months before the policy anniversary" and says a single refusal leaves cover unchanged for another year. Repeated refusals have a consequence:
If you decline the increase three years in a row we'll remove this option, and you won't have the option to increase the amount of cover in line with changes in inflation, for the remaining policy term.
On a joint policy, Legal & General needs "approval from both policy holders to decline an increase". Scottish Widows' summary says "You can turn down an increase for a year, but if you turn it down for two years in a row, it will stop. You won't be able to add it again at a later date." The thresholds are therefore three years in a row at Legal & General and two at Scottish Widows. For Aviva's Life Insurance Plan, the conditions describe declining as a choice made each year; before relying on it, ask the insurer or broker what follows several declines.
Declining protects your budget but means the sum stops tracking prices. A policy that has lost its increasing option behaves like a level one from then on, with the sum fixed while costs rise.
What is increasing term life insurance used for, and how is it sold?
The insurers describe a single purpose: keeping the real value of a payout. Scottish Widows' consumer page says increasing cover "is designed to combat price rises, maintaining its real value throughout the term". It suits cover meant to support a household's costs over many years, where a flat sum would buy less by the end. A repayment mortgage that shrinks over time is a different job, handled by decreasing term, and how big the sum should be at the start is covered in how much life cover you need.
On sale, it is an option chosen when you apply rather than a separate product. Aviva's page says you choose whether cover should "stay the same, rise in line with inflation, or go down over time", and Scottish Widows' summary says increasing cover has to be chosen when the policy starts. Availability varies: Scottish Widows lists increasing cover on its Protect policy but not on Plan & Protect, and Royal London's page lists an increasing cover option on adviser-sold products. Legal & General's terms say "You may have the option", and its guide refers readers to a financial adviser. So whether you can buy it, and with which limits, is a question to put to a broker.
Whichever policy you look at, ask which index and which caps it uses. The other cover types are laid out in the types of policy guide. How long term cover lasts and why some premiums rise with age deal with neighbouring questions.
Frequently asked questions
Is increasing life insurance worth it?
That is a judgement for the buyer, and no page can make it for you. What the documents show is the trade: a sum that follows an index, to a cap, in return for a premium that rises faster than the sum. A broker can price it beside level cover for the same details.
Is index-linked life insurance an investment?
No. Aviva's page says of its life insurance products that "Neither of these products are savings or investment plans" and that they pay out only on a successful claim. The index only decides how the cover and premium change. See whether a life policy is an investment.
Is increasing term life insurance renewable?
Renewal is a separate feature from indexation. Renewable and convertible options are explained in what convertible and renewable mean; ask the insurer or broker whether the policy you are looking at has them.
Is there index-linked whole of life cover?
Royal London's life insurance page lists an increasing cover option on its Whole of Life Insurance, which is only available through a financial adviser. That page gives no index or cap for it, so ask the adviser for the policy terms.
How long can an increasing policy run?
Aviva's summary says its plan "can last between one and 50 years" and has to end before you turn 91. Other insurers set their own limits.
To have increasing and level cover set side by side for your own details, the enquiry form here is the next step: it is free, takes a few minutes, and a broker who is FCA-authorised rings you back.
Sources
- Aviva Life & Pensions UK Limited, Life Insurance Plan Policy Conditions (DA03011 05/2023; linked from Aviva's direct life insurance page as current terms), read 19 October 2026. static.aviva.io
- Aviva Life & Pensions UK Limited, Life Insurance Plan Policy Summary (DA03008 05/2023; linked from the same page), read 19 October 2026. static.aviva.io
- Aviva, Life insurance (direct product page, WC05632 09/2026), read 19 October 2026. aviva.co.uk
- Legal and General Assurance Society Limited, Life Insurance - Policy Terms and Conditions (life section QGI12849, October 2026, in file QGI14872; Legal & General's own document, no partner named), read 19 October 2026. legalandgeneral.com
- Legal & General, Types of life insurance (19 June 2026), read 19 October 2026. legalandgeneral.com
- Scottish Widows Limited, Scottish Widows Protect Personal Protection Policy Summary (61041 01/26; the version for all customers except those using an aggregator), read 19 October 2026. adviser.scottishwidows.co.uk
- Scottish Widows, Life cover (consumer page, undated), read 19 October 2026. scottishwidows.co.uk
- Royal London, Life insurance (consumer page, undated, copyright 2026), read 19 October 2026. royallondon.com