Adjustable life insurance, also known as universal life insurance or flexible premium adjustable life insurance, is a type of permanent life insurance that has some of the features of a term life insurance policy. You can adjust your policy’s coverage amount, premiums, and premium payment period. Show
Adjustable policies can offer life insurance coverage until you die and come with a cash value account that earns interest. Though term life insurance doesn’t offer the same flexibility, it’s better for most people because of its lower rates. Key takeaways
Adjustable life insurance is a permanent life insurance policy that offers lifetime coverage and a cash value account, and also has premiums and coverage amounts that can be changed. There are three key elements you can change in an adjustable life insurance policy:
Most people who purchase an adjustable life insurance policy do so because they want both permanent coverage and flexibility. For example, if you’re expecting a child, you can increase your death benefit. If you’re out of work, you can decrease your premiums to fit your budget. There are some limitations to how much you can adjust your policy. For example, your insurer sets a minimum premium payment to comply with IRS tax regulations, which outline the requirements for your policy to qualify as a life insurance contract. [1] How does the cash value of an adjustable life insurance policy work?The cash value in a life insurance policy is a tax-deferred savings account that can earn a small amount of interest. Part of your monthly or annual premium payments goes toward the cash value of the policy. Your cash value growth changes based on the financial performance of your insurer’s portfolio. The cash value of an adjustable life insurance policy can be used in multiple ways:
Depending on which type of policy you have, you’re may not be guaranteed to earn interest (universal life policies will have a guaranteed minimum rate above 0%; indexed universal life policies will have a floor of 0% to protect you from losses and a capped upside return), so it’s important to keep an eye on your cash value spending. If you use up the cash value and can’t afford your premiums, you’ll lose your policy. ➞ Learn more about how to use your policy’s cash value How much does adjustable life insurance cost?It’s difficult to determine an average rate for adjustable life insurance. Standard life insurance rates already differ based on your health, age, and lifestyle, and with an adjustable policy, the premiums can change over time. Because coverage is permanent, you can expect the initial premiums to be higher than those of a term life insurance policy. On average, permanent life insurance costs five to 15 times more than term life insurance. How does adjustable life insurance compare to other types of life insurance?An adjustable life insurance policy is just one of many policy options to consider when purchasing life insurance coverage. Here’s how it compares to other common types of life insurance:
Is adjustable life insurance worth it?Because adjustable life insurance is so costly, term policies tend to be a better option for most people. Many people don’t need insurance protection for life and will find the high premium payments difficult to maintain. Most people don’t need a cash value feature either, and will get a better rate of return from a traditional investment account. Purchasing a term life insurance policy and investing the cost difference is generally the better choice. But, people who need lifetime coverage may find that adjustable life insurance offers the combination of protection and flexibility they need. An adjustable life policy is worth considering for:
Work with an independent broker like Policygenius to find a policy that’s right for your family’s needs. The two policies are the same. Adjustable life insurance is another term for universal life insurance. It depends on your insurance contract and whether your policy can support the adjustment. If you have too little cash value, for example, you may not be able to withdraw from it. Flexible life insurance and flexible premium life insurance are different terms for adjustable life insurance. They highlight the ability to change your premium amounts and payment schedule. Policygenius uses external sources, including government data, industry studies, and reputable news organizations to supplement proprietary marketplace data and internal expertise. Learn more about how we use and vet external sources as part of our editorial standards.
Authors Nupur Gambhir is a licensed life, health, and disability insurance expert and a former senior editor at Policygenius. Her insurance expertise has been featured in Bloomberg News, Forbes Advisor, CNET, Fortune, Slate, Real Simple, Lifehacker, The Financial Gym, and the end-of-life planning service Cake. Amanda Shih is a licensed life, disability, and health insurance expert and a former editor at Policygenius, where she covered life insurance and disability insurance. Her expertise has appeared in Slate, Lifehacker, Little Spoon, and J.D. Power. Expert reviewer Maria Filindras is a financial advisor, a licensed Life & Health insurance agent in California, and a member of the Financial Review Council at Policygenius. Questions about this page? Email us at . Which type of life insurance offers flexible premiums a flexible death benefit?Universal life insurance
It's sometimes called adjustable life insurance because it offers more flexibility than a whole life policy. For example, universal life policies allow you to increase or decrease your death benefit and even adjust or skip your monthly premium (within certain limits).
What type of life insurance has flexible premiums?Universal life is a flexible way to get a permanent life insurance policy and build cash value. The premiums are flexible: you can raise or lower payments within certain limits set by the insurance company.
What type of life insurance has the most flexibility?Universal life insurance — sometimes called "adjustable life insurance" — is one of the most flexible types of permanent life insurance. However, it's also riskier and more complex than whole life. This type of coverage provides a death benefit plus a cash value component or savings.
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