What do life insurance and wrenches have in common? Aside from both being useful tools in your life, they’re also both adjustable (some wrenches anyway). What is adjustable life insurance though? Just how adjustable is it and why would you want it in the first place?
We answer all of those questions below.
What Is Adjustable Life Insurance?
As you can guess from the name, this kind of life insurance policy is more flexible than other types. What does this mean? Through adjustable life insurance, you can change the premium and the cash value contained within the policy. Plus, you can adjust the death benefit as well.
Commonly, adjustable life insurance is referred to as flexible premium adjustable life insurance or universal life insurance.
While you may think that this means that adjustable life insurance only offers coverage for a set time, it’s actually a type of permanent life insurance. This means that as long as you keep up with your premiums payments you’ll have coverage until you that day you pass away.
When that happens, the beneficiaries you’ve named will receive a death benefit in the form of a payout of the policy.
How Does Adjustable Life Insurance Work? What’s the Difference Between Other Types?
How Does Adjustable Life Insurance Work? What’s the Difference Between Other Types?Once set up, your adjustable life insurance is paid into by your monthly premiums which will then be given out as a death benefit. This will occur at the time of your passing to the beneficiaries you selected (as previously mentioned above).
Because of the way life insurance works, you’ll also get a portion of interest (called cash value) from the way your insurance provider invests on your behalf.
Like other life insurance policies, your coverage depends on several factors within your life. These include your age, aspects of your health including medical conditions, and several additional factors that your life insurance provider will discuss with you.
What Is a Flexible Premium Life Insurance Policy?
A flexible premium life insurance policy takes advantage of the system in place for adjustable life insurance. As mentioned previously, you also gain a cash value alongside your monthly premiums. A flexible premium life insurance policy lets you use that cash value to actually pay for your monthly premiums if it has built up enough.
This is most useful when you’re in between jobs, or just need a little financial help to pay your premiums. Keep in mind, however, that this cash value is finite and relying on it heavily can deplete it quickly.
It’s best to let your cash value build to a point where the interest on it each month enables you to pay your monthly premiums without any additional payment from yourself.
Should You Get Adjustable Life Insurance?
Should You Get Adjustable Life Insurance?If you want to have wiggle room in your life insurance, this is naturally a good choice. It gives you all of the following benefits:
- You’re able to increase or decrease the death benefit.
- The policy allows you to make adjustments based on your financial situation.
- The cash value in the policy builds up over time.
Based on those advantages, it’s particularly beneficial to parents or caregivers of children with disabilities. This type of life insurance ensures that the children you care for can be cared for effectively their whole lives—even if the parent or guardian has passed on. Although these caregivers benefit the most, many people can benefit from this type of life insurance, it just depends on how much flexibility you’d like in your policy.
Life insurance isn’t cut and dry. There are a wide range of policy options to choose from including adjustable life insurance. Discuss with a life insurance provider what the best option for you is.