Adjustable Life Insurance

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Definition of Adjustable Life Insurance

Adjustable life insurance is a type of life insurance policy that allows the policyholder to adjust the policy's terms to suit their changing needs. The policyholder has the flexibility to alter the premium amount, the sum assured (face value), and the length of coverage, subject to certain conditions and within the policy's guidelines.

In India, adjustable life insurance policies are offered by various life insurance companies. These policies are regulated by the Insurance Regulatory and Development Authority of India (IRDAI). The specific terms and conditions, including the options for adjusting the policy, can vary between different insurers.

Key Features of Adjustable Life Insurance

Flexibility
The main advantage of adjustable life insurance is its flexibility. The policyholder can increase or decrease the premium amount, the sum assured, or the policy term as their financial situation and insurance needs change over time.
Cash Value Accumulation
Similar to other types of permanent life insurance, adjustable life insurance also has a cash value component. The policy accumulates cash value over time, which can be borrowed against or used to pay premiums.
Permanent Coverage
Adjustable life insurance provides lifelong coverage, as long as the premiums are paid.

Making Adjustments to the Policy

When making adjustments to the policy, the policyholder typically has two main options:

Change the Premium:
The policyholder can choose to increase or decrease the premium payments. An increase in premium could lead to an increase in the death benefit or shorten the length of time that premiums need to be paid. Conversely, a decrease in premium could reduce the death benefit or extend the premium payment period.
Change the Death Benefit:
The policyholder can also choose to increase or decrease the death benefit. However, increasing the death benefit may require a medical examination and will likely increase the premiums, while decreasing the death benefit will reduce the premiums.

Things to Consider

While adjustable life insurance offers significant flexibility, it's important for policyholders to understand the potential impacts of making changes to the policy. Changes can affect the death benefit, cash value, and premium payments. Additionally, frequent changes may incur fees. Therefore, it's advisable to consult with a financial advisor or insurance professional before making adjustments to the policy.