In this post, we are going to answer the question: what type of life insurance incorporates flexible premiums and an adjustable death benefit? Life insurance providers are offering a certain degree of benefits to their customers for them to get the best policies.
A whole life insurance policy plan guarantees both a death benefit and cash value. The cash value portion will grow due to interest and this can be used by the insured person before his death, unlike the death benefit account which will only be given to the surviving beneficiaries once the policyholder dies.
Since this type of insurance policy offers lifetime protection, it has relatively higher premium rates as compared to other life insurance policy plans. On the other hand, a term life insurance policy is active for a certain length of time. Typically, the term is ranging between 10 and 30 years.
Unlike a whole insurance policy, this does not have cash value account and offer death benefit only. This type of insurance is primarily used by those who want to protect their families financially once they die. Furthermore, the premiums of term life insurance are generally lower making it more affordable for policyholders.
Alongside those policies, a particular life insurance policy type is incorporating adjustable death benefits and flexible premiums in its terms. We are talking about the universal life insurance policy here. Let us talk about this in detail.
What Is A Universal Life Insurance?
As mentioned earlier, premiums for universal life insurance plans are flexible. Not only that, but its death benefits are also adjustable. Meaning to say, the policyholder can choose to have his premiums and coverage adjustable so that they will be able to manage them over time.
But take note that this will still require a minimum premium amount that the policyholder has to pay to keep his policy active. The policy is composed of the saving component and cost of insurance (COI).
The COI is the minimum premium amount that is needed to be paid. This is the cost that will be covering for the mortality rates, administration charges, among others. The amount will vary depending on the policy type purchased by the insured.
The saving component is referred to as the policy’s cash value. This is the amount that will accumulate over time because of the interest. Furthermore, it will cause the COI to increase. This portion will greatly depend on market stability. In case it is invested in a market that does not perform well, then it will be a waste.
Adjustable Life Insurance
This type of life insurance is allowing policy owners to make some changes with their insurance policy. For instance, they may opt to adjust the face value, premiums, death benefit, among others. With certain regulations and limits of a policy, the insured can opt to change the insurance policy based on his needs.
People are choosing this policy due to its leverage. Since people have changing needs, they might also want varying coverage levels. For example, you initially want low coverage, but after having a family, you realize you need more coverage. With this policy, you are allowed to adjust your policy’s face value.
Universal life insurance and adjustable life insurance are the same. There are no differences between the two policies. The term adjustable is used instead of the universal by others since it has a flexible nature.
Cash Value Of An Adjustable Life Insurance
Adjustable life insurance has a cash value portion that accumulates as time passes. As long as the policyholder is alive, he or she can withdraw or borrow a portion or even the entire cash value of the policy. They can use this money for any emergency financial situation.
Some would use this to finance their major expenses like for example, for a house down payment or in sending a child to college. It is said that the most appropriate time to do this is after fifteen years from the date of the policy enforcement.
That is because, by that time, the policy has most likely accumulated a significant amount of cash value. You can even use this money in paying off all of your premiums remaining so that you need not worry about your next payments anymore. Regardless, you might want to find out your insurance policy number on this one.
It’s A Wrap!
What type of life insurance incorporates flexible premiums and an adjustable death benefit? It can be intimidating to find life insurance. This is especially true if you come across an insurance policy that does not match your needs entirely. With that being said, it is best to have an insurance company that will specifically curate a policy based on your needs.
What’s even better is that the policy itself can offer some sort of flexibility. In other words, it is in its nature to allow some adjustments. The policy we are pertaining to here is the universal life insurance policy in which allows policyholders to select between investment options, coverage amount, premium rate, among others.
As such, if you are to find an insurance policy that will resonate with you, then it is best to choose the universal life insurance policy, also known as adjustable life insurance. Regardless, if you happen to be interested in cars, this article, “How much is Nissan GTR insurance?” might interest you!