During the upgrade, the old Avira-version is automatically uninstalled and the new version will be installed.
In the installation dialog you can enter your current license code again or reuse your existing license file.
When you click in the last sentence on license file, it should automatically open Windows Explorer and point to the folder where you have your old license file.
Select this file and click on Open. You should then confirm the installation of the license file with Yes.
Now you should be able to use your Avira product with all functions enabled.