What Is Adjustable Life Insurance?
<lingo>Most types of life insurance policies have specific terms. In whole life and term life policies, it can be a bit more difficult to change those terms. Adjustable life insurance policies are different. They allow for the policyholder to change some of the key terms of the policy during the lifetime of it. This can allow the individual to adjust the coverage based on his or her needs as they change throughout their lifetime. In many ways, adjustable life insurance is a type of combination of whole and term life insurance then.</lingo>
Adjustable Life Insurance Clearly and Briefly Explained
What makes adjustable life insurance unique is that it can be changed throughout the policy’s lifetime without having to cancel one policy and select another. The policy will dictate what specific components can be changed. However, in many cases, this will include the period of protection, or the term of the policy. It will also include the face amount of the insurance policy. This is the amount the policy pays out at the time of the covered individual’s death. It may also include changes to premiums, which is the amount paid to cover the policy as well as the length of the premium payment period. In short, these policies allow an individual to adjust as if they were purchasing term life policies.
<twitter>In many ways, adjustable life insurance is a type of combination of whole and term life insurance then.</twitter>
Another key component of these policies makes it more like whole life insurance. They have a component of interest-bearing savings. Some will have a cash value amount. In this way, the policy builds up value over the time it is in place. This may allow the individual to borrow against the policy during his or her lifetime.
Adjustable life insurance policies may be ideal for those who want cash value and protection in their life insurance, which is much like whole life insurance, but also want more feature flexibility available to them during the lifetime of the policy. Adjustable life insurance policies can provide an important advantage to some policy owners, but it is important to consider the costs associated with this type of policy compared to features.
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