FAQ: What Is A Variable Life Flexible Premium Life Insurance Policy?


What does flexible premium adjustable life insurance mean?

Adjustable life insurance is a hybrid policy that combines characteristics from term life and whole life insurance. Also known as flexible premium adjustable life insurance, the policy has a cash value component that grows with the insurer’s financial performance but has a guaranteed minimum interest rate.

Does variable life have flexible premiums?

Similarly, variable life insurance allows for the accumulation of cash value. However, the cash value can be invested in funds in a separate account, and the death benefits and premiums are flexible.

What is the greatest investment risk in a variable life insurance policy?

What is the greatest risk in a variable life insurance policy? The greatest risk in a variable life insurance policy is that the policyholder assumes the full risk of their investments. The insurance company doesn’t guarantee any rate of return, and doesn’t offer protection for investment losses.

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Is variable life insurance the same as whole life?

What is variable life insurance? As a type of permanent life insurance, variable life insurance requires you to pay your monthly or annual premiums for your whole life. Similar to other types of whole life insurance, variable life pays a tax-free lump sum to your beneficiaries if you die.

What is a flexible whole of life policy?

With a flexible whole of life policy, the policyholder chooses between a minimum level of guaranteed insurance and a maximum level to meet their needs. If the value of the policy is not enough to maintain the required sum assured, the policyholder can choose to increase the premium and/or reduce the level of cover.

What is an advantage of owning a flexible premium life insurance policy?

You also have the flexibility to pay premiums out of pocket, or skip payments and have the insurance costs covered by the money in the cash value account. As the policy owner, you can adjust the premium and death benefit amounts to suit your family needs as they change over time.

What type of life insurance incorporates flexible premiums?

Like said above, universal life insurance policy has flexible premiums and adjustable death benefits, this means that the policyholder is free to have an adjustable amount of coverage along with premiums that they can manage overtime.

What is the primary risk of a variable life insurance policy?

Variable life insurance involves investment risks, just like mutual funds do. If the investment options you selected for your policy perform poorly, you could lose money, including your initial investment. The prospectus does not describe the amount of insurance you purchased and the amount of fees you will pay.

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What are the pros to variable life insurance?

Variable Life Insurance Advantages Premiums are not fixed, as with traditional whole life insurance or term insurance policies. Within limits, policyholders may adjust their premium payments based on their needs and investment goals. Loan interest may become taxable upon surrender of the policy.

What is an element of variable life policy?

Variable universal life is a type of permanent life insurance policy with features that include cash value, investment variety, flexible premiums and a flexible death benefit.

Who among the following is most likely to buy variable life insurance?

Solution(By Examveda Team) Knowledgeable people comfortable with equity is most to buy variable life insurance. Variable life insurance is a permanent life insurance policy with an investment component. The policy has a cash value account, which is invested in a number of sub-accounts available in the policy.

What is a graded premium life insurance policy?

Graded Premium Policy. A type of whole life policy designed for people who want more life coverage than they can currently afford. They pay a lower premium rate that increases gradually over the first three to five years and then remains constant over the life of the policy.

What are 4 types of whole life policies?

The Four Types of Interest-Sensitive Whole Life

  • Universal. Universal life insurance often is considered the most flexible of all of the whole life varieties that are available.
  • Current Assumption.
  • Excess Interest.
  • Single Premium.

What is the most expensive type of life insurance?

Whole life insurance is considered to be the most expensive type of life insurance. Its premiums can be as much as five to 10 times more expensive than term life insurance premiums.

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What are the four types of life insurance?

There are four major types of life insurance policies. These life insurance types are Whole Life Insurance, Term Life Insurance, Universal Life Insurance, and Variable Universal Life Insurance.

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