Home » Insurance » Life Insurance » Adjustable Life Insurance

Adjustable Life Insurance: Understanding This Type Of Policy

Updated: September 9, 2018

One of the problems people face with life insurance is that there are so many different types of insurance on the market.

For example, one can get a whole life or term life policy, while there are even adjustable life insurance policies.

But not everyone is aware of the differences among these policies, which leads to confusion when making buying decisions.

The best way to get the life insurance policy you want is to take the time to understand the differences between term life, whole life and adjustable life insurance.

Here is a look at some key facts and benefits regarding adjustable life insurance.

Adjustable Life Insurance Policy Definition

What is adjustable life insurance? This is a type of life insurance policy where the policyholder has a chance to combine all the best elements of term life and whole life insurance.

If you feel as though you are too tied down by whole life insurance, or too boxed in by term life insurance, adjustable life insurance may be the best option for you.

Not only can you pick the characteristics from each type of policy you will add to yours, but you can adjust the policy’s specific terms in time. For example, it is possible to adjust the protection period, face amount, premium amount and the premium payment period.

All of these factors can have a huge impact on a policy, which means the policyholder must give a lot of consideration to what they want out of their life insurance.

But adjustable life insurance is a good opportunity for those who value flexibility. If you feel as though you are too tied down by whole life insurance, or too boxed in by term life insurance, adjustable life insurance may be the best option for you.

But it is not possible to get a good adjustable life insurance policy unless you take the time to learn about its different facets, pros and cons.

Adjustable Life Insurance Pros

The biggest pro with regards to adjustable life insurance is the flexibility and control you will exert over your policy.

Another benefit to adjustable life insurance is you can get all the perks of cash value and market interest that are normally associated with whole life, while maintaining a term on the policy.

While term life and whole life are great policy options in their own right, a number of features in these policies are set in stone. You will either agree to those benefits or find a different policy. Adjustable life insurance gives you so much more leeway to structure the type of policy that will meet your financial and benefit needs.

Perhaps you want to adjust the period of your policy when you are five years into the agreement, or you may want to adjust how many years to have to keep paying premiums. These things are easily altered with adjustable life insurance.

Another benefit to adjustable life insurance is you can get all the perks of cash value and market interest that are normally associated with whole life, while maintaining a term on the policy. This can save you money on the premiums, while still increasing your cash value through interest.

If you undergo personal or professional life changes, your adjustable life policy can change with you!

Is Variable Universal Life a Good Idea?

Despite the benefits, variable universal life insurance is not for everyone. And there are drawbacks to this type of policy.

Adjustable life insurance is great for people who want flexibility, but it is not as enticing for those who value guarantees more than anything else.

For example, there is often a market cap on the interest rate you can get with the adjustable life insurance policy. If the market has a great year, you may not reap all the benefits because of your insurance company’s market cap on adjustable policies.

Another negative is the fact that you could face higher premiums if there is a change in your circumstances, such as a health issue or an unhealthy habit you pick up. For example, you may start smoking ten years into the policy.

Adjustable life insurance is great for people who want flexibility, but it is not as enticing for those who value guarantees more than anything else. The premiums and interest rate associated with your policy can change at any time.

Getting one of these policies also requires a firm understanding of all the concepts and facets involved in a life insurance policy.

Other Types of Life Insurance

If you find that an adjustable life insurance policy is not for you, it may be time to consider whole life or term life insurance.

A term life policy is cheaper than whole life when you first get it, but it only lasts for between 5 to 20 years, depending on the policy you choose.

While there are limitations to each of these polices, it is the clear structure that makes them more attractive for the average insurance shopper. “What you see is what you get.”

Whole life insurance will come with higher premiums, especially if you are older, but it also gives you a guarantee that your policy and interest rate will not change as long as you keep up with your required premiums.

A term life policy is cheaper than whole life when you first get it, but it only lasts for between 5 to 20 years, depending on the policy you choose. This is good way to give your family financial protection if you die suddenly, but not a great way to build up a nest-egg over time.

The reason people prefer whole life and term life is because you do not have to worry about changing terms and conditions on the policy over time.

How to Save Money on Life Insurance?

Whether you settle on a term life, whole life or adjustable life insurance policy, you must get the best policy at the lowest cost possible. But how do you achieve this feat?

Carefully look at all the companies offering life insurance in your area. Assess their policies through the quotes they provide.

Saving money on life insurance means shopping around. Unlike car insurance, you will only buy life insurance a few times in your life. This means the decisions you make now will impact the premiums you pay for decades!

Carefully look at all the companies offering life insurance in your area. Assess their policies through the quotes they provide. Taking your time to wade through all these offers will result in you finding the most affordable policy that still provides good coverage.

The biggest mistake you can make is choosing the first policy you are quoted.

Another way you can save money on life insurance is by ensuring you engage in healthy, safe habits. For example, you should quit smoking cigarettes, ensure you are not drastically overweight and take care while driving so you do not get into too many accidents.