What feature characterizes an increasing term policy?

An increasing term policy is characterized by coverage limits that increase each year. This means that the death benefit provided by the policy will rise at specified intervals over the term of the policy. The intent behind an increasing term insurance policy is to provide a higher payout as inflation rises or as the insured's financial responsibilities grow over time, such as having children or taking on larger debts.

Choosing this type of policy allows policyholders to achieve more protection as their life circumstances change, making it particularly suitable for individuals who expect their financial obligations to increase in the future. For instance, if a young family purchases this type of policy, they can ensure that their life insurance benefit adjusts upwards as their needs for coverage grow.

Other options vary in their applicability to different types of term policies but do not accurately describe the unique characteristic of an increasing term policy. For instance, decreasing premiums, indefinite renewability, or a constant death benefit do not align with the fundamental principle of increasing death benefits that define this insurance type.