Adjustable Life Insurance
Barron's Insurance Dictionary:
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Adjustable Life Insurance
Coverage under which the face value, premiums, and plan of insurance can be changed at the discretion of the policyowner in the following manner, without additional policies being issued:
1. face value can be increased or decreased (to increase coverage, the insured must furnish evidence of insurability). The resultant size of the cash value will depend on the amount of face value and premium.
2. premiums and length of time they are to be paid can be increased or decreased. Unscheduled premiums can be paid on a lump sum basis. Premiums paid on an adjusted basis can either lengthen or shorten the time the protection element will be in force, as well as lengthen or shorten the period for making premium payments. For example, assume that John, who is 28, buys a $100,000 adjustable term life policy to age 65 with an annual premium of $1250. As his career prospers, he finds at age 32 that he can double the annual premium payment to $2500. This increase may change the original term amount to a fully paid-up life policy at age 65. With time, John might experience economic hardship and have to decrease his annual payment by two thirds. This could result in changing the paid-up-at-65 policy back to a term policy to age 65. Thus, at any time the policy can be either ordinary life or term. See also universal life insurance.
1. face value can be increased or decreased (to increase coverage, the insured must furnish evidence of insurability). The resultant size of the cash value will depend on the amount of face value and premium.
2. premiums and length of time they are to be paid can be increased or decreased. Unscheduled premiums can be paid on a lump sum basis. Premiums paid on an adjusted basis can either lengthen or shorten the time the protection element will be in force, as well as lengthen or shorten the period for making premium payments. For example, assume that John, who is 28, buys a $100,000 adjustable term life policy to age 65 with an annual premium of $1250. As his career prospers, he finds at age 32 that he can double the annual premium payment to $2500. This increase may change the original term amount to a fully paid-up life policy at age 65. With time, John might experience economic hardship and have to decrease his annual payment by two thirds. This could result in changing the paid-up-at-65 policy back to a term policy to age 65. Thus, at any time the policy can be either ordinary life or term. See also universal life insurance.
| Adjacent, Adhesion Insurance Contract, Additionalinsured | |
| Adjustable Premium, Adjustable Rate Mortgage (ARM), Adjusted Liabilities |
Investopedia Financial Dictionary:
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Adjustable Life Insurance
A type of life insurance that combines features of term and whole life coverage, giving holders the option to change the characteristics of their policies as their needs change over time. Adjustable life insurance policies allow holders to manipulate the period of protection, increase or decrease the face amount, raise or lower the premium amount, and change the length of the premium payment period. These policies also incorporate an interest bearing side fund (cash value).
Adjustable life insurance is also known as "flexible premium adjustable life insurance".
Investopedia Says:
Adjustable life insurance differ from other life insurance products because there is no requirement to cancel or purchase additional policies as holders' circumstances change.
Adjustable life insurance policies are best suited for individuals who want the protection and cash value benefits of whole life insurance along with an increased measure of flexibility. With the ability to modify payments, coverages and terms, holders can customize their coverage as their incomes and family responsiblities grow and change through the years.
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Barron's Insurance Dictionary
Dictionary of Insurance Terms. Copyright © 2008 by Barron's Educational Series, Inc. All rights reserved.
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Universal Life Insurance
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Indeterminate Premium Life Insurance
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