What type of term coverage has premiums and death benefits that increase each year?

Increasing term coverage is designed with the specific feature that both the premiums and the death benefits increase at scheduled intervals, typically annually. This type of policy reflects a need to keep pace with inflation or increased financial obligations over time, making it particularly useful for individuals who anticipate that their needs will grow.

In an increasing term policy, the gradual rise in death benefit ensures that the policy remains relevant in terms of purchasing power throughout the term of the coverage. While premiums also rise, they are structured to align with the increased death benefit, ensuring that the total cost reflects changing financial circumstances. This can be beneficial in long-term financial planning, as it provides a way to secure a larger amount of coverage as the insured's beneficiaries may require more financial support in the future.

This type of coverage is distinct from level term, which maintains consistent premiums and death benefits. Decreasing term coverage decreases the death benefit over the term while keeping premiums constant, typically used for specific financial obligations like mortgages. Renewable term coverage allows for the renewal of the policy at the end of its term but doesn’t inherently involve increasing benefits or premiums.