Changing your cover: increase options, indexation and waiver of premium

A life insurance policy is not always fixed at the amount you bought on day one. Most term policies, and some whole of life plans, come with built-in options that let you change the cover later: increasing it after events such as marriage, a child or a bigger mortgage without answering medical questions again, linking it to inflation so its real value does not shrink, or keeping it running if illness stops you being able to pay for it.

These options have names that rarely appear in adverts: guaranteed insurability, indexation and waiver of premium. Each one is a promise written into the policy's terms, and each one has limits, deadlines and conditions that decide whether it can actually be used. Phoenix Life describes guaranteed insurability as a guarantee that, within certain circumstances, you can increase the cover your term policy provides without providing any more medical evidence¹. Legal & General offers the same kind of option, now branded as "increasing your cover" and previously known as the Guaranteed Insurability Option, on both its term life insurance and its whole of life plan².

This page explains what each option does, when it can be used, what it costs and where it stops. It sits alongside our guides to how life insurance works, term life insurance and how life insurance premiums are worked out.

Guaranteed insurability options: more cover without a medical

The core promise of a guaranteed insurability option is simple: on certain events in your life, you can add to the amount of cover without the insurer asking fresh medical questions. Phoenix Life describes it as a guarantee that you can, within certain circumstances, increase the amount of cover your term policy provides without providing any more medical evidence, and notes that some policies also include continuation options to extend the term, with limits in place¹.

Why that matters is about timing. When you first apply for life insurance, the insurer assesses your health through the application and underwriting process. Anything that has changed since, a new diagnosis, a new medication, a higher weight, would normally push the price up or lead to exclusions, because pre-existing medical conditions that increase the risk of dying early increase premiums⁸. The guaranteed insurability option freezes the health assessment you passed at the start: the increase is priced on the original underwriting, not on your health today.

Legal & General offers this on its Life Insurance and on its Whole of Life Protection Plan, in both cases described as the ability to increase cover on certain specified events without the need for further medical evidence, with eligibility criteria and restrictions applying². Royal London's whole of life plan takes the same shape: there are some circumstances where you may be able to increase your cover without providing any further medical evidence⁹. The option is not automatic on every policy, and it is not unlimited: the events that trigger it, the size of the increase and the deadlines for claiming it are all set by the insurer's own terms, which the rest of this page sets out.

The option is worth distinguishing from two things it is sometimes confused with. It is not the same as a guaranteed acceptance policy, the kind of non-medically underwritten cover sold on over 50s plans, which accepts anyone but tends to cost more for a smaller sum¹⁰. And it is not the same as indexation, which raises cover automatically each year rather than in response to events.

Life events that let you increase cover

Each insurer lists the events that unlock the option. The lists differ in detail but cover the same ground: the moments when a family's financial commitments grow.

Legal & General's Life Insurance and its Decreasing Life Insurance both allow an increase without further medical information on certain life events, with terms and conditions applying¹¹. Royal London's whole of life plan is worded the same way⁹. TSB's policy booklet is more specific about the mechanics: cover can be increased without further medical information only for specified life events, only if the policy started before the life insured's 55th birthday, and only if the request is made within six months of the event⁵.

Dentists Provident's Foundation protection plan gives a fuller sense of what a typical list contains. Its option lets you increase cover by up to 20% of the initial amount, without any medical assessment, after you have had the cover and paid your premiums for six years, or if you are promoted, change jobs, become a parent, increase your personal mortgage, or marry or become a civil partner¹³. That list, promotion, job change, parenthood, a bigger mortgage, marriage or civil partnership, is representative of the events insurers use, though the percentage and the conditions vary.

Two practical points follow from how these options are written. First, the event has to happen after the policy started: an option cannot be used for a mortgage you took out before you bought the cover. Second, the window is short. TSB's six-month rule⁵ is the kind of deadline that is easy to miss when a baby or a house move is taking all your attention, so it is worth checking your own policy's list of events and its time limit as soon as a big change happens.

Limits on increases: how much extra cover you can add

The option guarantees that you can ask, not that you can add unlimited amounts. Insurers cap the increase, and the caps differ enough to matter.

Legal & General states that cover can be increased by up to 100% of the original amount on each occasion the option is used⁴. TSB caps the total differently: the total amount you can increase your cover by cannot be more than the lower of £200,000 or 100% of the original cover amount, across all changes⁵. Barclays Life Insurance for Mortgage Holders sets a £200,000 maximum total increase without reassessment, and allows the option to be used more than once within that cap¹⁴. Dentists Provident's Foundation plan allows up to 20% of the initial amount¹³.

The difference between a per-occasion cap and a total cap matters if you expect to use the option more than once. A per-occasion limit resets each time a qualifying event happens; a total limit is spent down over the life of the policy. And the basis matters too: a percentage of the original amount stays the same in cash terms even after years of premiums, while a fixed pound cap such as £200,000 can bind earlier on a large policy.

The premium for the increase is charged at the rate the insurer applies at the time, based on your age then, but on the health evidence from the original application. Cavendish Online notes that some insurers will increase cover without a new application and no further medical information, while others require a new top-up plan, which would mean fresh health questions¹⁵. Which side of that line your insurer falls on is in its terms.

Age limits and when the option ends

Guaranteed insurability options expire. The most common cut-offs are an age limit on the person covered and a requirement that the policy began early enough.

TSB's rule is explicit: the option is only available if the policy started before the life insured's 55th birthday⁵. Royal London's historic Personal Protection Policy conditions set a similar kind of boundary for their renewal option, requiring that the life assured is no older than 55 on his next birthday at the date the increased benefit amount starts¹⁶. Legal & General's adviser literature sets maximum ages at the other end of the product: 77 years old for its Increasing Life Insurance, with the policy required to end by the client's 90th birthday¹⁷.

The pattern across these terms is that the option is designed for the years when commitments are growing, typically the twenties to fifties, and is withdrawn as the insured person approaches later middle age. That has a practical consequence for anyone buying cover in their fifties or later: the option may not be available at all, or may already be closed, so the amount bought at the outset matters more.

It also interacts with health. Canada Life states that its guaranteed insurability increase option is available only if the application was accepted on standard terms with no medical rating¹⁸. Someone whose original application was rated because of a health condition may find the option was never attached, whatever their age. Checking what the policy actually contains, rather than what the product family generally offers, is the only way to know.

Indexation: cover that rises with inflation each year

Indexation is the second way a policy can change over its life, and it works on a different principle: instead of responding to events, it responds to prices. Phoenix Life describes it as increasing premiums and life cover in line with a cost of living index like the Retail Prices Index (RPI) or Consumer Prices Index (CPI)¹. Cavendish Online gives the consumer version: indexation gives you the option to increase the amount of cover you have on an annual basis to combat inflation, with the premium also increasing each year¹⁹.

The mechanics are usually an add-on to a level term policy. Cavendish Online explains that increasing life insurance is usually achieved by including indexation as an add-on to your level term life insurance policy¹⁵. Which? describes the choice of measure: cover can be set to increase by a set amount each year or by the retail prices index (RPI) measure of inflation²⁰. Vitality's term life cover states plainly that the cover amount rises each year in line with inflation²¹, and Zurich describes increasing cover going up every year on the anniversary of the policy by a pre-agreed amount²². Legal & General's guide to its increasing life insurance gives the fullest picture: every year the person covered is given the option to increase the insured amount in line with changes in the Retail Prices Index (RPI) without further medical evidence, with the premium also increasing if the option is taken¹⁷.

Indexation repeats the same cycle every policy anniversary: an offer is made, and if accepted, cover and premium rise together.

On cost, the starting point is better than many people expect. Cavendish Online states that applying indexation generally does not change the starting premium of your policy, though depending on the insurer this can result in a slight increase, especially for Income Protection¹⁹. What rises is the premium over time: Which? notes that because the payout is guaranteed to increase over the term, premiums increase as the cover rises²⁰. That is the trade: a level policy has a fixed premium and a payout whose real value shrinks with inflation, while an indexed policy has a rising premium and a payout that holds its value. Our comparison of level and increasing cover works through that choice in full.

The option is usually decided at the start. Cavendish Online states that indexation is added to your policy at the application stage and it is usually not possible to add it to an existing policy¹⁵. Canada Life's inflation option is likewise available only if the application was accepted with no medical rating¹⁸. Someone who wants indexation on cover they already hold without it will usually be looking at a new policy, with fresh medical questions.

Waiver of premium: what happens if you cannot work

Waiver of premium answers a different question from the other two options: not how the cover grows, but how it survives if you cannot pay for it. Macmillan describes it plainly: it means you will not have to pay your insurance premiums if you cannot work because of illness or disability²³. Macmillan's protection insurance guide adds that it usually does not start paying out for a while after you stop work²⁴.

The benefit is an add-on with its own price. Age UK's financial jargon checker notes that waiver of premium usually costs extra²⁵. Royal London sells it on its advised life cover as an optional add-on that pays your monthly payments if you are unable to work through illness or injury and you meet its definition of incapacitated²⁶. That definition is the hinge of any claim, and the different definitions insurers use, own occupation, suited occupation and the rest, are explained on our page about incapacity definitions.

The waiting period is the other hinge. Phoenix Life notes that in most cases a waiting or deferred period applies before the benefit starts¹. Legal & General's version is specific: for an additional cost, the client will not have to pay their premium after 26 weeks if the person covered cannot work due to illness or injury². Cavendish Online's guides make the same point across their product pages: if the plan includes waiver of premium and you are off work ill, your insurer will cover your premiums for you and you will not lose the cover²⁷.

A waiver of premium claim runs through a waiting period before the insurer takes over the premiums.

During the waiting period, the direct debit keeps running. That is the point at which people get into difficulty: if the premiums stop before the claim is confirmed, the policy can lapse, and Which? notes that if a policy lapses due to non-payment of premiums, coverage stops and no benefits will be paid on the policyholder's death³¹. Our pages on waiver of premium and when it starts, how to claim it and missed premiums and lapsed cover cover the mechanics in detail.

Where waiver of premium stops

Waiver of premium is itself insurance, and like the cover it protects, it has boundaries.

The first is the definition of incapacity. Royal London pays only if you meet its definition of incapacitated²⁶, and that definition decides not just whether a claim starts but when it ends. Someone who returns to work part time may no longer meet the definition, in which case the insurer resumes charging premiums even though the person is not back to full earnings. Age UK describes the benefit as guaranteeing that contributions will be paid for a period of time, usually by the insurer, if you are ill²⁵, and "for a period of time" is the operative phrase: the benefit pays while the condition in the policy is met, not indefinitely.

The second boundary is age. Insurers typically stop providing waiver of premium at a set age, often around 60 to 65, even where the life cover itself runs longer. The exact age is in each policy's conditions. Someone who falls ill close to that age may find the benefit pays for a shorter period than the illness lasts, and the life cover premiums become their own responsibility again.

The third boundary is the waiting period itself. A benefit that starts after 26 weeks² leaves half a year of premiums to find from sick pay, savings or state support. For someone with no savings and limited sick pay, that gap is the weak point of the benefit, and it is the reason our page on short-term income protection exists as an alternative that pays from an earlier point, at a cost.

If you cannot keep up the premiums

If the premiums become unaffordable and there is no waiver of premium claim running, the options narrow. Which? notes that there is no cashback value to most life insurance policies, so if you have to stop paying later because you cannot afford it, that will be lost money³². A policy that lapses stops paying out on death³¹, and reinstating it afterwards can involve new health declarations, as our page on reinstating lapsed cover explains.

Some insurers offer alternatives to simply stopping. Cavendish Online notes that where a customer is off work ill, payment holidays or repayment plans may also be available⁶. Reducing the cover amount, and so the premium, is another route some insurers allow, though it is a permanent cut to the payout. Before any of that, it is worth checking whether the policy includes waiver of premium at all: many people buy it as an add-on and forget it is there.

A diagnosis after the policy started does not itself raise the premium. Which? states that once a policy is in place, the premiums cannot be increased after a cancer diagnosis, and that as long as you made full and honest disclosures on your application and continue paying the premiums, the policy cannot be cancelled³³. The same principle applies to other conditions diagnosed later, such as diabetes: you do not have to tell your insurer or pay higher premiums³⁴. What a later diagnosis does affect is any new cover, including top-ups, which brings the guaranteed insurability option back into play.

Other routes to more cover without a medical

The guaranteed insurability option is not the only way to add cover without fresh medical questions, and it is worth knowing the alternatives, and their costs.

The first is indexation itself, covered above: each year's increase is given without further medical evidence¹⁷, so an indexed policy grows steadily without any events or claims. The second is a second policy. Multiple policies are perfectly legal, as our page on holding several life insurance policies explains, but a new application means new medical questions, and a condition diagnosed since the first policy will be assessed then. Which? notes that specialist, non-medically screened policies offer guaranteed cover for anyone, but these are often more expensive, with limited term length or total sum insured³⁵, and non-medically underwritten cover generally is restricted to lower sums insured and costs more³⁶.

The third is the timing of the original purchase. Because the guaranteed insurability option is tied to events and to age limits⁵, and because indexation must be chosen at the application stage¹⁵, the decisions made when a policy is first bought determine almost everything about how it can change later. Someone who expects a bigger mortgage or children in the next few years may find the option more valuable than a slightly lower premium today.

Where the options run out, an adviser can tell you what a specific policy contains and what a new top-up would cost. Cavendish Online notes that speaking with an adviser has benefits in working through these questions³⁷, and our guide to buying cover explains the difference between advised and direct routes. Free, impartial help is available from MoneyHelper, and if a dispute arises over a claim or an increase, the Financial Ombudsman Service can review it.