Understanding Adjustable Life Insurance

Definition:

Adjustable life insurance lets policyholders change their policy terms, such as the death benefit, length of coverage, and premium amount. It combines term and whole life insurance, offering flexibility for evolving financial needs.

Contents

• What Is Adjustable Life Insurance?
• Key Takeaways
• How Adjustable Life Insurance Works
• Real-Life Example: Flexible Coverage with Adjustable Life Insurance
• Adjustable Life Insurance Vs Universal Life Insurance?
• Why Adjustable Life Insurance Matters for Policyholders
• The Bottom Line
•  FAQs

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 or universal life insurance. This type of insurance maintains a cash value account that accrues interest and from which funds may be taken out to be used during one's lifetime.

While adjustable life insurance policies may be a bit complex to set up and manage, they have more flexibility compared to traditional options. Here are considerations that you should keep in mind if you are considering this policy.

Key Takeaways

• Unlike traditional life insurance, adjustable life insurance lets you make changes to the cash value, premiums and death benefit.

• You have the freedom to change your insurance coverage as life changes.

• Adjustable life insurance also has an element of savings — a cash value.

• As the cash value builds up, you have the option to borrow against it while continuing to pay your premiums.

• The gains are usually quite modest, and the cash value account often earns interest.

How Adjustable Life Insurance Works

Adjustable life insurance is considered a permanent insurance plan with additional flexibility. Depending on your choice, premiums can be paid once a month or once a year. A portion of your premium payments goes toward covering the cost of the insurance, while the remainder contributes to building the policy’s cash value.

People with life insurance can decide to alter their premiums, the death benefit and the cash value. To maintain the insurance, the policyholder pays premiums, and when they pass away, their beneficiaries receive the death benefits, and the cash value grows slowly in the policy with tax breaks.

Real-Life Example: Flexible Coverage with 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.

Adjustable Life Insurance Vs Universal Life Insurance?

Adjustable and universal life insurance are permanent policies offering flexibility, but differ in control and growth potential. Here’s a quick comparison of their key features

Why Adjustable Life Insurance Matters for Policyholders

Adjustable life insurance is considered valuable because it gives policyholders the power to modify their coverage as their needs evolve. Unlike traditional policies, adjustable life insurance orchestrates changes to death benefits, premium payments, and cash value to fit fluid financial and life circumstances.

Such flexibility would better suit a person whose needs evolve with time—for example, after a raise, the death benefit may require an enhancement, whereas the premiums could be lessened in times of financial constriction. This adaptability will ensure that the validity of a policy remains intact, assuring that through various changes in one's life and priorities, one is provided protection and peace of mind.

The Bottom Line

Adjustable life insurance allows you to increase or decrease your premiums, build up cash value, or modify the death benefit as per changing needs. This flexibility allows your insurance coverage to stay attuned with lifestyle changes. Remember that any modification is solely governed by your insurer's terms. Hence, always opt for a reliable provider to ensure that benefits are reliably aligned with your long-term financial security.

 FAQs

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

What is adjustable life insurance?

Adjustable life insurance is a type of life insurance policy that offers flexibility in terms of premiums, death benefit, and coverage period. It allows policyholders to make changes to their policy over time to adapt to their changing needs.

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 and builds cash value, similar to whole life insurance, but with a lower initial premium for a set period, which then increases to a higher level.

How does an adjustable life insurance policy work?

Adjustable life insurance is another name for universal life insurance, a type of permanent life insurance that grants you more control over your policy details. For example, you can adjust the schedule and amount of your premium payments, and increase or decrease your coverage amount.

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

Most adjustable policies allow you to decrease the death benefit. Some allow you to increase the death benefit, though you may need to go through health underwriting again. Adjustable life includes cash value and is permanent coverage that can last your entire life; there's no expiration date.

What are valid options for an adjustable life policy?

An adjustable life policy allows a policy owner to make changes to the death benefit amount, adjust their payment on their premiums, modify the guaranteed protection or premium payment periods, and add money to or remove funds from their cash value.

What type of life insurance incorporates flexible premiums and an adjustable death benefit?

Universal Life Insurance (UL) is a kind of life insurance which offers a combination of flexible premiums and flexible death benefits. It is a type of permanent life insurance that allows for lifelong insurance protection and a savings feature similar to a savings account.

What type of life insurance incorporates flexible premiums and an adjustable death benefit?

Universal life insurance offers flexible premiums and an adjustable death benefit. It combines lifelong coverage with a cash value component, allowing policyholders to increase or decrease their death benefit and adjust premium payments based on their financial needs.

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

Life Insurance Cash Value: Savings Component That Builds Over Time in Permanent Policies

Neviya Laishram Jul 30, 2025

What is an Actuary in Insurance and What are their Roles & Responsibilities?

Neviya Laishram Jul 29, 2025

What is Life Assured in Life Insurance?

Neviya Laishram Jul 23, 2025

What is a Lapsed Policy in Life Insurance?

Neviya Laishram Jul 22, 2025

What is Keyman Insurance?

Neviya Laishram Jul 22, 2025

All Articles

Topics

Life Insurance Glossary

Life Insurance Glossary

Life Insurance Glossary

Life Insurance Glossary

Life Insurance Glossary

All Topics

Want to post any comments?