Flexible premium adjustable life insurance is a form of whole life coverage that offers a wider range of investment options as well as monthly and semiannual premiums that can be adjusted from time to time. This particular type of adjustable life insurance is often a great way to build an asset that can be drawn upon if necessary during the retirement years, either by borrowing directly against the policy or by using the cash value of the flexible premium adjustable life insurance as collateral for a loan. When choosing this type of life insurance coverage, it is important to consider the total face value of the policy, how long it takes to build cash value in the coverage, and the structure of the premiums.
As with any type of whole life policy, a flexible premium adjustable life insurance plan comes with a set death benefit that is provided to beneficiaries regardless of how long the policy has been in effect, once the minimum waiting period has been fulfilled. This is in contrast to term life policies, in which the insured party must die within the term specified by the policy in order for a beneficiary to be due anything. When identifying the amount of the death benefit, consider the type of end of life expenses that may apply, along with the other assets you would leave behind for your loved ones. If you are not sure how to determine the right amount of coverage, an insurance agent can help evaluate your present circumstances and prospects for the future, and make suggestions on an equitable amount of coverage.
Along with the amount of the death benefit, it is also important to consider how quickly the flexible premium adjustable life insurance will begin to accrue some sort of cash value. Since the asset can be used as collateral to obtain short-term loans or even be borrowed against with the understanding that the outstanding amount of the debt will be deducted from the death benefit if you die before repaying that borrowed amount, you will probably want a plan that begins to build up cash value as quickly as possible. Since some plans will require that you pay in a certain amount or that the policy is in effect for a minimum amount of time before cash value begins to accumulate, check the terms of any plan you consider and identify when and how this accrual process takes place.
One last factor to consider with any flexible premium adjustable life insurance plan is the amount of the monthly premium. While that premium can be adjusted at certain intervals during the life of the plan, such as when you begin to earn more money and want to increase coverage, make sure you can begin with a premium that fits well into your current household budget. Doing so will minimize the chances of finding it difficult to make those premiums and allow you to diligently build up this asset over time.
