To upgrade the template you have to set another template as default then uninstall the old template, install the new version, and then set it as default.
Careful, be prepared to lose any customizations. This is when it becomes critical to have done proper customization so that you can easily locate and save copies to reapply any css customizations and any image changes.
BTW, if you have not yet installed Akeeba Backup this would be a great time to start keeping regular back ups.