Adjustable life insurance is a cross between term and whole life insurance that enables policyholders to customize policy characteristics. These characteristics include premiums, the timeframe in which the period is paid, death benefits, policy value, and the duration of protection.

Adjustable life insurance also makes provision for cash value accounts, which is an investment account that produces interest.

How adjustable life insurance works

If you want to get the benefits of permanent life insurance, with some level of flexibility, while having a policy of term life insurance, then adjustable life insurance is for you.

It is different from other types of life insurance in the sense that when your financial status changes (increase or decrease in income, getting married, extra family members, etc), you do not need to buy extra or cancel an existing policy. Instead, you can tweak the existing policy to suit your needs.

Adjustable life insurance

Just like every other insurance the policyholder gets to pay a premium periodically (monthly or yearly). Part of the premium goes to financing the policy while the other part goes into the cash value account (the division of the premium is usually stated in the contract).

The policyholder then has the power to adjust their policy to fit their needs and ability For instance they can choose to increase their premium because they got married or reduce their Premium if they got unemployed. 

Elements of adjustable life insurance that can be adjusted

There are three elements that can be adjusted in this kind of policy. They are; 

  • Premiums
  • Death benefits
  • Cash value

For premiums, how often your premium is paid or the amount paid as a premium can be changed to suit your capability as long as you pay the minimum cost required.

For death benefits, you can reduce or increase your death benefits by either reducing your policy value or increasing it respectively. 

For cash value, it can be increased if premiums are increased or decreased if you use the cash to pay for your premium or you withdraw from your cash-value account.

Advantages of adjustable life insurance

The advantages are:

  • This type of insurance is very flexible and can be tailored to suit your needs without adding strain on your financial capability.
  • Your death benefits can be increased to ease a lot more financial burden on your beneficiaries.
  • The cash value can grow over time and can be withdrawn to help with personal financial needs or to pay for premiums.

Disadvantages of adjustable life insurance

The advantages mentioned above are the disadvantages. They include

  • Premiums are usually high because of the flexibility and cash value involved in adjustable life insurance.
  • If the return of investment from the cash value investment portfolio is low it affects the policy negatively. 
  • It cannot be trusted as a sole investment platform since most of the investments are low risk and the interest rate is low.
  • Premiums increase if one should increase the death benefit.

Guidelines for adjustments

For premium adjustments, the policyholder may not adjust the premium such that it goes against the guidelines of your state or country. 

Although most insurance providers put measures to avoid violation of such guidelines. They also make riders available for people who need extra coverage exceeding the agreed limit.


Adjustable life insurance is made to provide the flexibility that regular life insurance policy doesn’t have.

changes can be made to make a policy have the characteristics of term life insurance or whole life insurance. Adjustable life insurance allows you to tailor your policy to meet your specific needs.

As with any other insurance, endeavor to first check-in with your insurance provider to know more about how this type of insurance can benefits you.