How do I upgrade to iCloud+?

See information in Upgrade to iCloud+ - Apple Support

Do note, buying iCloud Storage will not enable you to install the iOS update / security release, that requires local space on your device which iCloud has no bearing on.

Also, you cannot increase your device's local storage capacity. If its low in storage, you will need to delete content or move it out to a different device or storage medium such as an external drive to make room for the update.