Flexible Premium Adjustable Life Insurance
Flexible premium adjustable life insurance is a type of whole life insurance or universal life insurance policy that allows policyholders to adjust their premiums, much like variable life insurance. In addition to the death benefit, the policy has a cash value, which is invested to earn returns. The amount of cash value in the policy depends on the amount of premiums paid in and the success of the investments.
Flexible premium adjustable life insurance, also simply known as adjustable life insurance, allows you to change your life insurance policy’s coverage, death benefit, and premiums as things change or fluctuate in your life, whether that means you change jobs, have children, buy a home, or lose an income.
Whole and Term Life Insurance
The two primary forms of life insurance are pure or term life insurance and permanent or whole life insurance. Term life insurance has a set term of between 5 and 30 years after which it must be renewed. Whole life insurance stays in effect as long as the premiums are paid. While term life insurance rates are more affordable, whole life insurance has a savings or investment feature, which accrues cash value over time. Flexible premium adjustable life insurance is a type of whole life policy and never has to be renewed. Learn more by reading about a term vs. whole life insurance comparison.
Flexible Payments
Most whole life insurance policies have a fixed premium, which is paid monthly or quarterly. Flexible premium life insurance has a minimum and maximum payment limit. Amounts paid for premiums over the minimum payment are diverted to the investment feature of the policy.
Some policies guarantee a minimum rate of return compared to a benchmark, but others base the return entirely on the performance of the investments. The minimum payments for this type of policy are not as cheap as life insurance rates for term policies.
Investment Options
Some flexible premium adjustable life insurance policies decide how the money from the policy will be invested while others allow the policyholder to make investment decisions, like universal life insurance. The options may include stocks, bonds, mutual funds and other financial instruments. The insured may choose to receive dividends on the cash value of the policy or to keep money earned through investments in the cash value of the policy.
The policy remains valid unless all the cash value is redeemed or the insured allows the policy to lapse. In regards to the investment account of adjustable life insurance, it functions very much the same way as universal life insurance, allowing for higher returns but more potential risk.
Why Choose Adjustable Life Insurance?
Flexible premium adjustable life insurance has many of the same features as variable life insurance, but the death benefit is not tied to the success of the investments. Flexible premium life insurance provides financial protection for families while building the cash value, and some policyholders may use the cash value to save for a child’s college education, a down payment on a house, or for their own retirement. Since the premiums must be paid to keep the policy in effect, the insurance acts like an enforced savings plan.
However, unlike other types of life insurance, the premiums on flexible premium adjustable life insurance are not fixed and the insured can control the amount of premium devoted to investments. Adjustable life insurance can help the insured reach financial goals while providing adequate life insurance protection for their families. Enter your zip code and compare life insurance quotes to find out if flexible premium adjustable life insurance is affordable for you.
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