As far as I understand, you'd expect the title to always update regularly, no matter what happens inside the terminal; that is, even if there's no activity (e.g. the prompt is displayed and you're not typing anything), or when a long process is running. Am I right?
The title can be updated by emitting a certain escape sequence called OSC 0, e.g.
echo -ne '\e]0;newtitle\a'
If you don't see this command changing the title, that's because the subsequent prompt overrides it again. You need to remove the setting of the title from the prompt. As a proof of concept, you can try this to make sure it indeed sets the title:
echo -ne '\e]0;newtitle\a'; sleep 5
You could write a script that emits and regularly updates the title in a similar manner, and run that script in the background.
There's one inherent problem with this approach, though. If you're running another app in the terminal, that application might also print escape sequences. Especially with other layers in between, such as ssh, there's a slim chance that the given app prints an escape sequence in two consecutive steps (e.g. the escape sequence that switches the foreground to red is "\e[31m" which might be printed as the characters "\e[3" in a single step, and shortly afterwards "1m"). There's a slight chance that your background script will intervene and print its stuff in the middle, potentially breaking the display big time (no pun intended).
There's no simple way to prevent this from happening. Perhaps tmux or a similar layer can be configured to update the title to contain the time. I don't know if let's say tmux supports this, but it has the knowledge required to make sure that this small chance of display corruption is eliminated. Well, it already shows the time by default (not in the title but on the actual canvas, though).
I recommend that you run a single graphical clock applet or app somewhere on your desktop, independently of terminal emulators. That way the same piece of information (the time) is not displayed in multiple locations, only at one place. Furthermore, you save the terminal's title (the available real estate) for some actual more meaningful information that's specific to that particular terminal.