Encourages acts to limit term of Parliament (10)

'encourages' is the definition.
(stimulate can mean to provoke or encourage)

'acts to limit term of parliament' is the wordplay.
'acts' becomes 'simulates' (simulating is acting or pretending).
'to limit' is an insertion indicator.
'term of' indicates one should take the final letters (term can mean the terminus or ending of the word).
The last letter of 'parliament' is 't'.
'simulates' enclosing 't' is 'STIMULATES'.