Adjustable Life Insurance: Meaning and Features

Definition: Adjustable life insurance is a type of life insurance that allows the policyholder to modify key policy elements such as the premium amount, death benefit, or coverage duration over time, based on changing financial needs.

Contents

• What is Adjustable Life Insurance?
• Key Features of Adjustable Life Insurance
• How Adjustable Life Insurance Works
• Real-Life Example of Adjustable Life Insurance
• Advantages and Limitations of Adjustable Life Insurance
• Adjustable Life Insurance vs Whole Life Insurance
• The Bottom Line
• Frequently Asked Questions

What is Adjustable Life Insurance?

An adjustable life insurance policy allows you to change important provisions over time, such as the premium payment and the death benefit. It is also called flexible premium adjustable life insurance. This policy also includes a cash value component that grows over time and earns interest. The policyholder may use this cash value during their lifetime, subject to policy terms, while the life cover continues.

In India, adjustable life insurance policies operate under IRDAI regulations and are offered with insurer-specific terms. Policyholders should review flexibility limits, charges, and underwriting requirements before choosing a plan, as features may vary across providers.

Key Features of Adjustable Life Insurance

• Flexible premium payment options within insurer-defined limits

• Adjustable death benefit, usually subject to underwriting

• Permanent life coverage

• Cash value component that grows over time

• Option to access cash value through loans or withdrawals

How Adjustable Life Insurance Works

Adjustable life insurance is a type of permanent life insurance that offers added flexibility. Depending on the policy terms, premiums can be paid monthly or annually. Premium payments are used to cover the cost of insurance, with any remaining amount contributing to the policy’s cash value.

Policyholders may have the option to adjust their premium payments and death benefit over time, within the limits set by the insurer. The cash value grows gradually with tax advantages and can be accessed or borrowed against while the policy remains active. As long as required premiums are paid, the policy continues, and when the policyholder passes away, the beneficiaries receive the death benefit.

Real-Life Example of Adjustable Life Insurance

Pratik is 35 and works as a teacher, so he chooses an adjustable life insurance plan to support his family. To begin with, he settles for a low premium and a small death benefit since it is more affordable. Five years following his promotional change and pay rise, Pratik changed the policy to raise the death benefit and payments. This gives him the ability to make necessary changes to his plan without going through the process of getting a whole new one.

Advantages and Limitations of Adjustable Life Insurance

Some of the key advantages and disadvantages of adjustable life insurance are listed below

Advantages

• Allows flexibility as income and responsibilities change

• Provides lifelong coverage

• Builds cash value over time

• Eliminates the need to buy a new policy when needs change

Disadvantages

• More expensive than term insurance

• Flexibility is limited by insurer rules

• Cash value growth may be lower compared to market-linked plans

Adjustable Life Insurance vs Whole Life Insurance

Whole life insurance offers fixed premiums and a fixed death benefit throughout the policy term. It is predictable and stable but offers little flexibility.

Adjustable life insurance, on the other hand, allows policyholders to change premiums and death benefits over time. While both provide permanent coverage and cash value, adjustable life insurance is better suited for individuals who expect changes in income or financial responsibilities.

The Bottom Line

Adjustable life insurance allows policyholders to change premiums and death benefits over time, within the limits set by the insurer. The policy also includes a cash value component that grows gradually. This flexibility helps the insurance coverage stay aligned with changing financial and life needs, subject to the insurer’s policy terms.

Frequently Asked Questions

Below are some of the frequently asked questions on Adjustable Life Insurance

What is adjustable life insurance?

Adjustable life insurance is a type of permanent life insurance that allows policyholders to change certain policy features, such as premium payments and the death benefit, over time, within limits set by the insurer.

What is modified whole life insurance?

Modified whole life insurance is a permanent life insurance policy with a unique premium payment structure. It offers lifetime coverage with lower initial premiums that increase after a fixed period, while building cash value.

How does an adjustable life insurance policy work?

An adjustable life insurance policy allows policyholders to adjust premiums and death benefits while maintaining permanent coverage and a growing cash value component.

Can you increase the death benefit on an adjustable life policy?

Most adjustable policies allow an increase in the death benefit, usually subject to additional underwriting.

What is the difference between adjustable life and whole life insurance?

Whole life insurance has fixed premiums and a fixed death benefit. Adjustable life insurance allows policyholders to change premiums and coverage amounts as their financial needs change.

Can you cash out an adjustable life insurance policy?

Yes, adjustable life insurance builds cash value that can be accessed through loans or withdrawals, subject to policy terms.

What cannot be changed in an adjustable life policy?

The insured person cannot be changed after the policy is issued. This is because underwriting is based on the insured’s age, health, and risk profile at inception.

Explore Life Insurance Product

Term Insurance

Acko Life Flexi Term Plan

Will Creation Service

Buy Life Insurance Online

Life Insurance Estate Planning

Family Life Insurance

Life Insurance Riders

Recent

Articles

Who is an Appointee in Life Insurance?

Neviya Laishram Dec 22, 2025

What is Survival Benefit in Life Insurance?

Neviya Laishram Dec 22, 2025

How to Renew Your Individual Health Insurance Policy Easily Online

Roocha Kanade Dec 19, 2025

Is ₹1 crore term insurance enough?

Neviya Laishram Dec 17, 2025

Can I Buy Travel Insurance Today for My Trip Starting Tomorrow?

Team Acko Dec 16, 2025

All Articles

Topics

Life Insurance General

Individual Health Insurance

Individual Health Insurance

Individual Health Insurance

Individual Health Insurance

All Topics

Want to post any comments?