In what situation would increased premiums occur during the life of a policy?

Increased premiums during the life of a policy are characteristic of increasing term insurance. In this type of policy, the death benefit rises over time, which typically leads to a corresponding increase in the premium as the insurer adjusts to the larger coverage amount. This feature is designed to provide more substantial financial support in the event of a claim as the insured ages or as inflation increases the cost of living.

The nature of increasing term insurance is that it offers a level premium initially, but as time goes on, the amount of coverage continues to increase, thus escalating the premiums. This contrasts with other types of policies where premiums may remain level or decrease over time.

Non-participating policies do not accumulate dividends or experience adjustments in premiums based on performance, and thus would not exhibit an increase in premiums. Decreasing term insurance, on the other hand, features a decreasing death benefit and typically has level premiums throughout the policy's duration. Whole life insurance generally provides set premiums for the life of the policy and does not inherently incorporate an increase in premium as part of its design. Therefore, increasing term insurance is distinct in that it specifically entails a structure where premiums increase aligned with the rising coverage amounts.