I would like to increase the spacing / padding / insets for the JTextField and JTextArea. Effectively increase the spacing between the two read line on the image

I would like to increase the spacing / padding / insets for the JTextField and JTextArea. Effectively increase the spacing between the two read line on the image

You could also try using an EmptyBorder to put in gaps between the two components. If you already have a Border, you can use that in conjunction with an EmptyBorder to create a CompoundBorder. In the code fragment below, a new CompoundBorder is created that has a TitledBorder and an EmptyBorder which enforces a padding of 1 pixed around the component.
testPanel.setBorder(javax.swing.BorderFactory.createCompoundBorder(javax.swing.BorderFactory.createTitledBorder(null, "Border Title", javax.swing.border.TitledBorder.DEFAULT_JUSTIFICATION, javax.swing.border.TitledBorder.DEFAULT_POSITION, new java.awt.Font("Verdana", 1, 11)), javax.swing.BorderFactory.createEmptyBorder(1, 1, 1, 1)));