What Kind Of Special Need Would A Policyowner Require With An Adjustable Life Insurance Policy?

An adjustable life insurance policy is also known as universal life insurance policy. Find out how it works.

Term life and whole life insurance features are combined in an adjustable hybrid. As long as premiums are paid into the plan, permanent insurance, such as a flexible life policy, is intended to cover you for the rest of your life. Permanent life insurance comes in the form of adjustable life insurance. As long as payments are paid, adjustable life insurance stays in force during your lifetime, unlike term insurance.

The cash value amount, premium payments, and even the death benefit may usually all be changed by policyholders. Another name for universal life insurance is adjustable life insurance. Discover what adjustable life insurance is, how it functions, its benefits and drawbacks, and the circumstances it can be most beneficial for you by reading on.

The policy, sometimes called flexible premium adjustable life insurance, comprises a cash value element that increases in value per the insurer’s financial success but has a minimum guaranteed interest rate. Although they have advantages and disadvantages, adjustable plans might be a decent whole-life insurance substitute if you want more flexibility if your financial situation changes.

Not all life policies are suitable for all types of people; some are too expensive, some have low coverage, and some features in a policy are simply not needed by someone. So why pay for the extra features? But that’s not all to the world of life insurance; a few policies are known as ‘adjustable’ by nature, explicitly designed to suit consumer needs. It is an added benefit that a universal or adjustable life insurance policy gives.

Adjustable Life Insurance Policy

The meaning of an adjustable life insurance policy provides an adjustable death benefit and FLEXIBLE PREMIUMS to policyholders. So, the original question is answered. What kind of particular need would a policy owner require with an adjustable life insurance policy?

A universal life insurance policy is also known as adjustable because it provides the same benefits as a flexible one. Adjustable life insurance is a mix of term Life insurance and whole life insurance, and along with that, it also offers policyholders to tweak some of the policy features. These may include the period of the policy, face amount, premiums, etc.

Along with the adjustable benefit, a universal life insurance policy has a guaranteed death benefit paid out to the beneficiaries tax-free, and the cash value component accumulates with interest over time. This cash value component can be withdrawn or borrowed for other expenses during the policyholder’s life, and this amount can be used to pay off a portion of your premiums too.

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Image Source: Canva

The adjustable life insurance policy allows policyholders to increase or decrease their death benefit as their financial requirements change. The death benefit you agreed to during the procedure may not be required anymore because you have fewer dependents now, or maybe you want more coverage with time for loan repayments or sending a kid off to college. Only an adjustable life insurance policy allows you to change your needs as time passes. However, it will still depend on the insurer how often he enables you to make said changes.

The death benefit amount and other circumstances, such as the policyholder’s age, health, lifestyle, and whether or not they smoke, will all significantly impact the value of an adjustable life insurance policy. As a form of permanent insurance, flexible life will always be more expensive than term insurance, which has no cash value and only lasts for a specified number of years. For instance, according to CNN, a $500,000 term policy would cost an average of $430 annually. For example, according to CNN, a $500,000 term policy would cost an average of $430 per year for a 35-year-old male, but permanent coverage would cost around $4,400 annually.

A permanent life insurance policy that can last your entire life (depending on the policy) is adjustable life insurance, commonly called universal life insurance. It enables you to modify your premiums up to a specific point. You have the option of paying more than the required minimum premium. It helps you to increase the death benefit by making additional premium payments.

Allows you to increase the death benefit by making other premium payments. Includes a cash value account that has the potential to earn interest. You may utilize the cash value to pay premiums if you maintain a minimum cash value level to prevent the policy from expiring.

The operation of adjustable life insurance

The adaptability of adjustable life insurance is an essential characteristic. You may modify your premium payments, death benefits, and cash value with adjustable life insurance to your shifting requirements and financial objectives. Due to its adaptability and ability to change with your changing financial condition, flexible life insurance is a practical choice.

Payment of premiums

Adjustable life insurance allows you to alter your premium payment following your spending plan and financial objectives. For instance, your spending plan and financial goals. For example, you can pay a more significant premium to increase your cash worth more quickly or a smaller tip to keep your costs cheaper.

Funeral benefit

You can modify your death benefits with adjustable life insurance. You can raise or decrease the coverage depending on your changing requirements, such as following significant life events like getting married, having kids, or purchasing a home. You can ensure your loved ones are appropriately secured at various points in your life. It enables you to make sure that the loved ones in your life, this allows you to make sure that your loved ones are appropriately secured.

Cash price

The cash value element of flexible life insurance is another distinctive aspect. A percentage of your premiums goes towards creating cash value, which develops gradually and is tax-deferred. The cash value can be accessed to provide finances for various needs, including paying for college, starting a business, or boosting retirement income. Additionally, you can utilize the cash value to raise your death benefit or pay premiums.

Adjustable Life Insurance Policy Pros and Cons

Before deciding which policy works best for you, weigh several pros and cons.

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Image Source: Canva


  • The policy owners have freedom or flexibility in choosing the premium payment schedule they will use up until the point at which they submit another request for a change to the insurance plan.
  • The policy contains a mandatory saving component once the policy owner selects a premium payment plan, similar to a regular-level or regular-level premium whole life plan, until the policy owner requests a change in the excellent payment plan. This feature will appeal to many people who need more discipline to keep up a regular savings program.
  • The policy owner may alter the duration or face amount of coverage, which is the third benefit. The insurance provider will almost allow reductions in the face amount of coverage. Because such death benefit reductions may subject them to unfavorable tax implications under the Modified Endowment Contract (MEC) regulations, policy owners who lower death benefits during the first seven years of issue should only do so with the advice and counsel of their insurance consultants. Insurance in face amounts is often allowed by insurance providers, provided proof Of insurability exists. The MEC guidelines may require the insurance to undergo a new test period if the death benefits are increased.
  • Most AL policies have a cost-of-living clause that, absent proof of insurability, causes the face amount to rise automatically as CPI Commonly, the premium is also raised in accordance.
  • Depending on whether profits are dispersed at death or throughout life, cash value interest or earnings may build When interest rates fluctuate, the cash values are not susceptible to the market value swings typical of longer-term municipal bonds and other longer-term fixed-income investments.
  • Policy owners can borrow policy cash values at a low net cost, which benefits number seven. Cash values continue to increase and are credited with at least the minimum guaranteed rate specified in the policy, even though policy owners must pay interest on policy loans. As a result, the reported policy lending rate is lower than the actual net borrowing rate.


  • The immediate recognition technique is used by specific flexible life plans, like many whole life policies, to decide how favorable investment, mortality, and expenditure experience is allocated to payouts on policies with policy loans. According to this strategy, the insurance company cuts the dividends assigned to policy-containing policy loans to reflect that policy loans often produce less than other assets in their overall portfolio. Businesses frequently use the direct recognition approach in plans with set policy-loan rates. The immediate recognition approach is typically not used in projects with variable lending rates and other policies with fixed loan rates; instead, dividends are distributed without taking loans into account.
  • Some AL plans, like some UL policies, do not pay dividends in favor of crediting current mortality and interest to cash values instead.
  • To the amount related to gain in the policy, lifetime payouts or withdrawals of cash values are subject to income tax.
  • Because cash surrender values represent the insurance company’s recovery of sales commissions and early policy expenditures, surrendering the policy during the first five to ten years may result in a loss.
  • The interest on policy loans is typically not deductible.
  • The flexibility concerning premium payments and death benefits allows policy owners to alter the policy in a way that might accidentally turn it into a modified endowment contract (MEC), which has negative tax implications.

Indeed, there aren’t many risks to having an adjustable life insurance policy; there is nothing too complicated about it which is why it is one of the most popular policies acquired by customers around the US.

Considerations when selecting adjustable life insurance

It’s crucial to carefully evaluate several aspects when choosing a flexible life insurance policy to ensure it fits your needs and financial goals.

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Image Source: AVLexis/Youtube

Financial objectives

Consider your immediate and long-term financial objectives, such as debt repayment, retirement planning, and school finance. Select a customizable life insurance policy so that you may alter the premiums, death benefits, and cash value accumulation to match your unique financial objectives.

Risk tolerance

Consider your investment choices and risk tolerance when choosing various adjustable life insurance plans. A VUL or IUL policy may be appropriate if you feel at ease with market swings and seek more significant returns. A GUL insurance could be a better option if you want a more conservative strategy with assured death benefit protection.


When choosing an adjustable life insurance policy, consider your budget and affordability. Choosing a life insurance policy, you can easily afford over the Long term is crucial, even if flexible life insurance offers flexibility in premium payments. Therefore, consider any changes in your financial situation while creating your budget and ensuring affordable premiums.


Consider the degree of adaptability that the adjustable life insurance policy offers. If necessary, look for choices that let you change your premiums, death benefits, and cash value accumulation. A more adaptable approach may more easily adjust to your goals and financial condition.

Company reputation

Consider the standing and soundness of the insurance provider providing the adjustable life insurance policy. Choose a business with a proven record of sound finances, excellent customer support, and handling claims. Check the company’s ratings from unbiased rating agencies to confirm its dependability and credibility.

Riders and additional benefits

Explore the optional features and extra advantages of the adjustable life insurance policy. Your policy coverage may be improved by adding riders, which are supplemental add-ons that are optional. Examples of riders include expedited death benefits, and long-term care riders include expedited income riders. Examine if these riders apply to your needs and whether they enhance the value of your coverage.

Adjustable Life Insurance Rates

According to age, these are the rates of adjustable life insurance for healthy, non-smoking people, with a coverage of $100,000.

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Image Source: Canva
20 $36.19 $434.38
30 $42.00 $504.00
40 $62.74 $752.93
50 $89.50 $1,074.09

Note: Sample rates have been extracted online, courtesy of PolicyGenius.

Adjustable Life Insurance Companies

Considering a life insurance policy may seem complicated, but the process is more straightforward if you have a list of companies. Here is a list compiled by ValuePenguin that filters the best companies of 2020 with BBB ratings, A.M best ratings, and J.D Powell score, an analytics marketing company in the US.

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Image Source: Opinion Expert
Company BBB A.M. Best J.D. Power
State Farm A- A++ 825
Northwestern Mutual A+ A++ 812
Nationwide A+ A+ 810
MetLife B- A+ 793
Mutual of Omaha A+ A+ 792
New York Life A+ A++ 791
Prudential A A+ 784
Pacific Life A+ A+ 783
MassMutual A A++ 781
Lincoln Financial A+ A+ 778
Guardian Life A+ A++ 776
Principal Financial A+ A+ 773
John Hancock A+ A+ 759
Midland National Life A+ A+ 758
AXA Financial A+ A 755
Transamerica B A+ 751
Primerica A+ A+ 743
AIG A- A 741

Is Adjustable Life Insurance a good idea?

The increase in consumer popularity has proved that there is little to lose in an adjustable policy compared to term life or whole life. As mentioned above, it is a hybrid of both approaches with the added benefit of flexible premiums that most people find very suitable.

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Image Source: Canva

Whether or not adjustable life insurance is a good idea depends on your policy needs and proper evaluation of the pros and cons. The most significant advantage is that the coverage can be adjusted without renewing the policy and going through the whole process again.

Shopping around for insurance policies is very important; don’t go with the first company or policy that comes your way. Ask around, hire agents, and talk to friends with similar life insurance policies to see which ones worked for them and why. Go with the approach that gives you the most benefit and resonates with your needs.

What distinguishes flexible life insurance from other types of life insurance?

In contrast to traditional life insurance plans, adjustable life insurance may be tailored to your specific needs and evolve along with your financial situation. We’ve compared flexible life insurance to some other well-liked insurance options below.

Whole life versus adjustable life insurance

Because it offers less flexibility than adjustable life insurance, whole life insurance is different. Entire life policies have a guaranteed fixed interest rate at which the cash value of the insurance increases. It implies that you will only receive the fixed interest rate, regardless of how well the insurer’s portfolio performs. You can miss out on possible benefits with whole life insurance compared to an adjustable life policy, which has an interest rate that can rise when the insurer performs well. On the other hand, the interest rate for a flexible life policy may be lower than the guaranteed rate provided by whole life insurance when the insurer performs poorly.

If you’re looking for a less complicated plan with lower premiums, whole-life insurance may be advantageous. Regular premiums for whole life insurance are promised to remain the same amount. People who want to buy life insurance but don’t want to worry about the policy prices altering later in life may find this reassuring.

Variable versus adjustable life insurance

Both adjustable and variable life insurance are types of permanent insurance, but the main distinction between them is how the cash value develops. As previously indicated, flexible life plans have a minimum interest rate, but your cash value may grow faster depending on the insurer’s financial health. Your interest rate for variable life is determined by the investment categories you have chosen from a list provided by your insurer. Investment categories linked to stocks, bonds, treasury bills, and other investment assets may fall under this category.

There is often no fixed minimum interest rate because you choose the cash value growth mechanism. As a result, variable life insurance may have an interest rate substantially lower than an adjustable life policy and close to zero. It is how variable life insurance is a more “risky” financial product compared to more reliable policies like whole and adjustable life insurance.

Adjustable life insurance vs. term life insurance

Term life insurance offers some flexibility at the time of purchase, but flexible life insurance does typically not permit policy revisions. When you acquire a term life insurance policy, you can decide how much coverage and how long the policy will be in effect. Term life insurance doesn’t have a cash value element, another distinction. The range is straightforward and uncomplicated, costing less than adjustable life insurance.

Comparing Universal and adjustable life insurance

Universal life insurance, which gained popularity in the 1980s and 1990s, is almost identical to adjustable life insurance. It depends on what the business that sells the goods names and their death benefits with a universal life insurance policy.


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Image Source: Canva

Which life insurance provider is the best?

The most significant life insurance provider differs for each person based on their tastes, financial situation, and policy requirements. It could be helpful to contact an insurance agent who can direct you to providers with the finest types of policy options for you. The top life insurance companies from there are the ones you should compare quotations from.

Is universal life insurance also known as adjustable life insurance?

Yes, universal life insurance is often referred to as adjustable life insurance. Both versatile and flexible life insurance policies have cash value components that are invested at rates decided by the insurer, and both approaches enable you to utilize your cash value to pay premiums. Both types let you change the death benefit, albeit doing so could raise the tips you must pay.

Is adjustable life insurance the most affordable kind of coverage I can purchase?

No, the cheapest life insurance coverage is always term life insurance. The two primary forms of life insurance are term life insurance. The two primary forms of life insurance are term and permanent. However, permanent plans with a cash value element and no term restriction are often five to ten times more expensive than term policies.

What distinguishes entire life from adjustable life?

Permanent life insurance comes in the types of whole life and adjustable life. On the other hand, whole life insurance provides less flexibility than adjustable life. A flexible policy allows you to change your premium and death benefits, unlike full life insurance, which has a fixed premium you must pay for the rest of your life. While returns on your cash value account are set for whole-life policies, they usually rise as you make premium payments for an adjustable life insurance policy.


Most conventional insurance plans lack the flexibility that adjustable life policies provide. The amount of time that can pass between modifications is constrained, though. The request must be submitted within the given time frame and adhere to the insurer’s rules. The diversity in changes may produce a policy that resembles either term life insurance or whole life insurance. Adjustable life insurance products let policyholders tailor their coverage to match their current or future requirements. Every company being examined must be thoroughly investigated to guarantee they are among the top life insurance providers currently in business, just as with any permanent coverage.

John Otero

John Otero

John Otero is an industry practitioner with more than 15 years of experience in the insurance industry. He has held various senior management roles both in the insurance companies and insurance brokers during this span of time. He began his insurance career in 2004 as an office assistant at an agency in her hometown of Duluth, MN. He got licensed as a producer while working at that agency and progressed to serve as an office manager. Working in the agency is how he fell in love with the industry. He saw firsthand the good that insurance consumers experienced by having the proper protection. John has diverse experience in corporate & consumer insurance services, across a range of vocations. His specialties include Major Corporate risk management and insurance programs, and Financial Lines He has been instrumental in making his firm as one of the leading organizations in the country in generating sustainable rapid growth of the company while maintaining service excellence to clients.

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