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.

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, there are a few policies that are known ‘adjustable’ by nature, designed specifically to suit consumer needs. This is what added benefit a universal life insurance policy or an adjustable insurance policy gives.

Adjustable Life Insurance Policy

The meaning of adjustable life insurance policy is providing an adjustable death benefit and flexible premiums to policyholders. So, the original question is answered.

What kind of special need would a policyowner require with an adjustable life insurance policy?

FLEXIBLE PREMIUMS!

Let’s get into more details.

A universal life insurance policy is also known adjustable, because it also provides the same benefits as the adjustable life insurance policy. Adjustable life insurance is the 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 time period of the policy, face amount, premiums etc.

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 This cash value component can be withdrawn or borrowed for other expenses during the life of the policyholder, and this amount can be used to pay off a portion of your premiums too.

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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 start of the policy may not be required anymore because you have less 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 be dependent on the insurer how many times he allows you to make said changes.

Adjustable Life Insurance Policy Pros and Cons

There are several pros and cons that you need to weigh before really deciding on which policy works best for you.

Pros

  • Adjustable premiums and death benefit
  • Changes can be made without having to renew the policy
  • Cash value earns interest and grows overtime
  • Monthly premiums decrease as cash value account increases
  • No need to prove insurability when adding new coverage

Cons

  • More expensive than term life insurance
  • If investment doesn’t perform well, it could affect the interest rate which would affect the cash value component of the policy
  • Substantial increases in the policy may call for full medical underwriting

It is true that 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.

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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AGES MONTHLY YEARLY
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

Shopping for the best life insurance policy may seem hard, but if you have a list of companies right at your disposal, the process seems a little less challenging. 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 which is an analytics marketing company in the US.

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?

Increase in popularity among consumers has proved that there is not much to lose in an adjustable policy in comparison with term life or whole life. Like mentioned above, it is a hybrid of both policies with an added benefit of flexible premiums that most people find very suitable.

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

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

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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