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In this article we investigate into the estimation of sinusoidal parameters for sinusoids with linear AM/FM modulation. It will be shown that for linear amplitude and frequency modulation only the frequency modulation creates additional estimation bias for the standard sinusoidal parameter estimator. Then an enhanced algorithm for frequency domain demodulation of spectral peaks is proposed that can be used to obtain an approximate maximum likelihood estimate of the frequency slope, and an estimate of the amplitude, phase and frequency parameter with significantly reduced bias. An experimental evaluation compares the new estimation scheme with previously existing methods. It shows that significant bias reduction is achieved for a large range of slopes and zero padding factors. A real world example demonstrates that the enhanced bias reduction algorithm can achieve a reduction of the residual energy of up to 9dB.