Flexible Premium Adjustable Life Insurance
Flexible premium life insurance is a permanent life insurance policy that allows you to adjust your monthly premium according to your budget. It's usually much more expensive than term life insurance. Keeping your permanent policy opens many benefits for you, but those benefits depend on the company.
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Daniel Walker
Licensed Insurance Agent
Daniel Walker graduated with a BS in Administrative Management in 2005 and has run his family’s insurance agency, FCI Agency, for over 15 years (BBB A+). He is licensed as an insurance agent to write property and casualty insurance, including home, life, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. To ensure our content is accura...
Licensed Insurance Agent
UPDATED: Jul 12, 2023
It’s all about you. We want to help you make the right life insurance coverage choices.
Advertiser Disclosure: We strive to help you make confident life insurance decisions. Comparison shopping should be easy. We are not affiliated with any one life insurance company and cannot guarantee quotes from any single company.
Our life insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different life insurance companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance-related. We update our site regularly, and all content is reviewed by life insurance experts.
UPDATED: Jul 12, 2023
It’s all about you. We want to help you make the right life insurance coverage choices.
Advertiser Disclosure: We strive to help you make confident life insurance decisions. Comparison shopping should be easy. We are not affiliated with any one life insurance company and cannot guarantee quotes from any single company.
Our life insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different life insurance companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.
On This Page
- Flexible premium life insurance is a permanent life insurance policy where policyholders can adjust payments to meet their needs.
- As a permanent life insurance policy, flexible premium life insurance builds a cash value over time.
- You can borrow money against your death benefits.
- If a life insurance company has a variable life insurance program, you may be able to add the flexible premium option to it.
Flexible premium life insurance is also known as adjustable life insurance. It’s one of the few life insurance policies that are in between term and permanent life insurance.
Learn more about flexible premium life insurance by going through our comprehensive guide on various details about flexible premium life insurance and other variations of the policy like flexible premium variable life insurance.
What is a flexible premium policy?
A flexible premium life insurance policy is a permanent life insurance policy with perks that make it feel like a term and whole life insurance policy. However, flexible premium life insurance allows you to adjust your premium based on your income and may give you the opportunity to borrow money from your life insurance policy.
You’re also able to adjust the interest rate of how your cash accumulates, which is why it goes by other names like flexible premium adjustable life insurance.
How does a flexible premium life insurance policy work?
As permanent life insurance, a part of flexible return of premium life insurance goes toward life insurance. The other part of the monthly premium goes to the cash value that accumulates over time. You have the option to pay higher rates per month that gains interest.
Therefore, you’ll maintain your death benefits (the amount of your coverage if you pass away) and the cash value that’s collecting with your life insurance company.
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How is flexible premium life insurance different from other policies?
Flexible premium life insurance works like whole life insurance, but whole life insurance has a fixed interest rate. Both permanent life insurance policies aren’t allowed to make investments in the stock market.
You can get a flexible premium variable life insurance policy if you want stock market investment options.
What about flexible premium life insurance with indexed universal life (IUL) insurance and an interest option? Flexible premium variable life insurance carries investment options. It works by taking part or all of your cash value that’s accumulated and investing it into an equity index like the S&P 500.
According to Money-Zine, financial professionals use an equity index to measure an individual or business on how they are performing. These evaluations are compared to other competitors in the same industry.
Flexible Premium Life Insurance Pros and Cons
Getting flexible premium life insurance from companies like MetLife has pros and cons. Let’s explore the advantages and disadvantages of flexible premium life insurance policies.
| Flexible Premium Life Insurance Pros | Flexible Premium Life Insurance Cons |
|---|---|
| You'll have flexibility with premium scheduling. | You can't go back permanent life after transferring to term life. |
| There's an opportunity to change to term life. | Early termination of your policy can decrease cash value. |
| You can control how much you pay. | Too many cash value withdrawals of cash value will have to be reported to the IRS. |
| Death benefit payments are tax-free. | Any interest payments you receive will have to be reported during tax time. |
| Life insurance savings aren't affected by stock market. |
It’s important to remember that every life insurance company conducts policies differently.
Some companies carry higher premiums, while other companies have strict rules on when you can shift policies or decrease payments. Become familiar with your provider’s standards by asking as many questions as possible.
For more information about MetLife, look at our MetLife Life Insurance review.
Four Ways to Use Your Flexible Premium Life Insurance While You’re Living
There are a lot of things that get overlooked under life insurance. Many may not realize they can use your life insurance policy while they’re still living.
We put together four ways you can use your flexible premium life insurance policy.
Cash Flow Banking
Also called infinite banking, this concept says you should borrow money against your death benefits for business ventures, buying a home, or any investment.
https://youtu.be/CxpK3Y1e1R4
Borrowing money from the best life insurance companies can result in lower interest rates, and you have your entire life to pay off the balance. If you don’t pay off the balance before you pass away, the unpaid balance will be deducted from your coverage amount (death benefits).
Accelerated Death Benefit
An accelerated death benefit is a life insurance rider that allows you to draw money from death benefit value if you’ve been diagnosed with a terminal illness. After you’ve passed away, the remaining death benefit balance will be given to your beneficiary.
Waiver of Premium Rider (WoP)
If you lose your job, become severely ill, or if you’re rendered incapable of work, a waiver of premium rider will allow you to keep your life insurance policy even if you can’t make payments. After you’ve recovered, you can start making payments again.
Cash Value Accumulation
Permanent life insurance policies build cash values. The more you pay per month, the more this cash account grows. Some policies carry interest rates, which makes these accounts grow over time.
However, converting your flexible premium life insurance from permanent to term life insurance will disrupt your chances to use a cash value life insurance accumulation account.
Ready to compare quick life insurance quotes?
Your life insurance quotes are always free.
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Your life insurance quotes are always free.
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Case Studies: Flexible Premium Adjustable Life Insurance
Case Study 1: The Budget-Conscious Individual
Lisa was a 35-year-old individual with a limited monthly budget. She wanted to secure permanent life insurance coverage but was concerned about the high premiums associated with whole life insurance policies. After exploring her options, Lisa decided to opt for a flexible premium adjustable life insurance policy.
This type of policy allowed her to adjust her monthly premium according to her financial situation while still enjoying the benefits of permanent life insurance. By customizing her premium to fit her budget, Lisa could ensure the long-term protection she desired without straining her finances.
Case Study 2: The Financial Planner
David was a financial planner who understood the importance of having a life insurance policy that could adapt to his changing financial circumstances. He decided to invest in a flexible premium adjustable life insurance policy.
This choice allowed him to adjust his premium payments based on his income fluctuations and financial goals. David appreciated the ability to increase or decrease his premium to align with his current financial situation, providing him with the flexibility he needed to manage his finances effectively.
Case Study 3: The Wealth Accumulator
Sarah was focused on building her wealth and wanted a life insurance policy that could accommodate her financial goals. She chose a flexible premium adjustable life insurance policy that allowed her to allocate more of her premium towards the cash value component.
By increasing her premium payments, Sarah could accumulate cash value at a faster rate and potentially benefit from higher interest earnings. This strategy provided her with the opportunity to grow her wealth while still maintaining the benefits of permanent life insurance.
Flexible Premium Life Insurance: The Bottom Line
Who benefits the most from flexible premium life insurance? The average person can benefit from flexible premium life insurance. It has a versatile interest rate for cash savings, and it allows policyholders to adjust premiums that help their budget.
The downside to the flexible premium adjustable life insurance policy is the price. Permanent life insurance, like whole or universal life insurance, has higher rates than term life insurance quotes.
Are you ready to buy flexible premium life insurance? You can find cheap, flexible premium life insurance rates in your area by comparison shopping.
Frequently Asked Questions
What is flexible premium life insurance?
Flexible premium life insurance is a type of permanent life insurance policy that allows you to adjust your monthly premium based on your budget. It offers the benefits of both term and whole life insurance, with the flexibility to borrow money from the policy.
How does flexible premium life insurance work?
Flexible premium life insurance works by dividing your premium into two parts: one part goes towards life insurance coverage, and the other part goes towards a cash value that accumulates over time. You have the option to pay higher premiums to increase the cash value and interest earned.
How is flexible premium life insurance different from other policies?
Flexible premium life insurance is similar to whole life insurance but offers the flexibility to adjust premiums. Unlike whole life insurance, it does not have a fixed interest rate. Additionally, there is a variation called flexible premium variable life insurance that allows for investments in the stock market.
What are the pros and cons of flexible premium life insurance?
The advantages of flexible premium life insurance include versatile interest rates for cash savings and the ability to adjust premiums. However, it tends to be more expensive than term life insurance. The specific pros and cons may vary depending on the insurance company.
Can I use my flexible premium life insurance while I’m still alive?
Yes, there are several ways you can utilize your flexible premium life insurance while you’re alive. These include cash flow banking (borrowing against the death benefits), accessing an accelerated death benefit in case of terminal illness, having a waiver of premium rider to maintain coverage during financial hardship, and accumulating cash value over time.
Your life insurance quotes are always free.
Secured with SHA-256 Encryption
Daniel Walker
Licensed Insurance Agent
Daniel Walker graduated with a BS in Administrative Management in 2005 and has run his family’s insurance agency, FCI Agency, for over 15 years (BBB A+). He is licensed as an insurance agent to write property and casualty insurance, including home, life, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. To ensure our content is accura...
Licensed Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance-related. We update our site regularly, and all content is reviewed by life insurance experts.
