Below we’ll look at what type of life insurance incorporates flexible premiums. One thing first though…
There are many types (and sub types) of life insurance. And because of this it gets so so confusing to try to understand them all.
Insurance in general is confusing, especially the terms that you have to remember. But life insurance seems to take things to yet another level of confusion.
There are many differences between the different types of life insurance products out there. Some big. Some small.
In this article we’ll be taking a look at life insurance policies that have flexible premiums and adjustable death benefits.
So what type of life insurance incorporates flexible premiums into them? Below you’ll find out and, we promise, we’ll cover it in as simple to follow and understand method as possible!
What Type Of Life Insurance Incorporates Flexible Premiums?
First thing to cover is that, broadly speaking, there are two main types of life insurance. Term life insurance and permanent life insurance. Term life insurance policies only last for a set period of time (often 10, 20 or 30 years).
Permanent life insurance on the other hand lasts until the policyholder passes away.
There are two types of life insurance policies that incorporate flexible premiums and both are permanent life insurance policies.
The first one is universal life insurance policies. The other one is known as variable life insurance policy.
At the same time these two types of life insurance policies also incorporate adjustable death benefits.
What Are Flexible Premiums and Adjustable Death Benefits?
But what exactly are flexible premiums and adjustable death benefits?
A policy with flexible premiums lets you change your policy depending on your needs. In this type of policy, you may raise or lower your premiums, coverage amount and/or death benefit over time.
Of course there are minimum premiums you’ll have to pay in order to keep your policy active. But, within the rules of the policy, you’ll be able to change your policy during your lifetime based on the level of
Similarly, adjustable death benefit refers to the ability of customers to decrease or increase the death benefit as your coverage requirements change.
Universal Life Insurance
Universal life insurance is the same as adjustable life insurance (again, confusing!). It’s a type of policy that allows policyholders to make changes with their life insurance policy. This includes the adjustable death benefit and flexible premiums covered in the last section.
Each policy has its limits and regulations. The benefit of this type of life insurance policy includes its adjustable options.
This is great for people whose needs change as time passes by. For example, the policyholder may need low coverage at the start of the policy as he/she only has a spouse.
Then he/she may need higher benefits as time passes by when he/she has kids.
Universal life insurance is a permanent life insurance which means that it includes a cash value component.
Variable Life Insurance
A variable life insurance policy is a type of permanent life insurance policy that features an investment policy. It also includes a cash value component which is common for permanent life insurance policies.
Like universal life insurance policy, this type of insurance policy features flexible premiums as well adjustable death benefits. Unlike ordinary income, the cash value in variable life insurance is not taxable.
And since variable life insurance is somewhat of an investment, it also has its risks and benefits. This includes the mentioned cash value and the lack of tax on it.