A life insurance plan that allows you to vary your coverage based on your needs as they change.
With adjustable life insurance, you choose the type of plan and face value amount you need, and your life insurance company calculates a plan that encompasses those parameters. The policy that results could be anything from term life that lasts for a short period to longer coverage under a whole life plan.
Because of its flexibility, adjustable life insurance offers options that other types of life insurance don’t, such as the ability to increase or decrease coverage, duration of the policy and payment options.
“Adjustable life insurance” may also be used as a synonym for “variable life”. This is a type of policy in which the face amount and cash value of a life policy rely on a special fund’s investment performance. With this arrangement, the insurer places reserves in investment accounts that guarantee a minimum face amount. However, these accounts remain separate from the company’s general account and a cash value amount is rarely guaranteed.