Its yearly renewable term life premiums are projected to increase by 2.5% a year for the next five years which will make a compound increase of 15% by 2015.

Fidelity Life chief executive Milton Jennings says other companies have tended to hit all the increases up-front, whereas it is trying to spread the effect.

"We have done a lot of modeling on future profits and we felt this way was best, we talked to advisers and got feedback and they felt a small step approach would be better than a big increase."

It is also projecting that it will increase level term rates by 20% from July 1.

Jennings says Fidelity Life has been waiting for quite a while to see how other companies would tackle the tax increases, and once it knows what its competition is doing, it may reassess its situation as it needs to stay competitive.

It also announced last November that it was moving away from the battle to offer the highest upfront commissions on life insurance sales to a renewal commission model.

Jennings told Good Returns that "it's the way of the future, building a sustainable model stream to make business strong. It's good for clients and customer service - it reduces the churn factor".

Its Platinum Plus Plan has a range of options for advisers who can choose from anywhere between a 124% upfront and 16.2% renewal commission to 31% upfront and 34.8% renewal commission.

Jennings says over the medium to long term the renewal model is better for advisers, however when an adviser switches it will take about three years until the model produces higher income.

"We believe the market needs to move to a renewal model, we just think it is the right way to go."