Everything You Need to Know about Adjustable Life Insurance

Updated · Jun 18, 2022

Most people think of life insurance as a set-in-stone deal. You buy a policy, and you’re stuck with those terms for the rest of your life.

While that's the case with most policies, there are some flexible options.

Below, we define adjustable life insurance and show you what and how you can change the policy.

What Is Adjustable Life Insurance?

Adjustable, also known as universal, life insurance allows policyholders to make changes to their policy.

It has the pros and cons of permanent life insurance:

  • Living benefits
  • Growing cash value
  • Coverage for life 


  • Expensive premiums

That said, universal life insurance has the edge over many policies. This type of life insurance offers flexible premiums, death benefit, and cash value.

Let’s see how that works in more detail.

How Does an Adjustable Life Insurance Policy Work?

Adjustable policies resemble whole life insurance.

Both cover the entire life span of the policyholder and have a savings component that earns interest.

Simply put, adjustable insurance is basically the more flexible version of a whole life policy.

With it, you don’t need to cancel your policy or buy supplemental coverage if your life circumstances change. Instead, you can adjust the terms.

For example, you can increase the death benefit if your family or income grows. In contrast, if you lose your job, you can lower the premium payments.

But note that any changes may require additional underwriting. A bigger increase might even mean you have to take a new medical exam.

What Can You Change With Universal Life Insurance?

As we said, adjustable life insurance has a flexible premium, death benefit, and cash value.

This means you can change all of these elements.

The death benefit is the money your beneficiaries will receive if something happens to you. You can increase it by making bigger or more frequent payments.

The premium is the money you pay each month.

With an adjustable life policy, you can vary them as your financial situation changes. Of course, there’s a minimum amount you must contribute to keep the policy active.

The cash value is the amount you accumulate through premiums and investments.

Like the death benefit, you can increase it by making bigger payments. The value decreases if you borrow from it or use it to pay the premiums.

Adjustable Life Insurance Pros and Cons

This type of policy is great for people who want the protection and savings component of whole life insurance but with more flexibility.

Still, it’s not without its downside. Before you decide, consider all pros and cons of universal life insurance.

Adjustable Life Insurance Pros

  • Adjustable life insurance has a flexible premium, death benefit, and cash value
  • Offers permanent coverage
  • Builds cash value you can borrow

Adjustable Life Insurance Cons

  • Premium payments are usually bigger
  • Interest earnings tend to be modest
  • All changes happen within certain limits

Given all that, universal life insurance is most suitable for wealthy individuals. Plus, it's not the best option if you want to use it as an investment tool.

Wrap Up

Adjustable life insurance offers more flexibility than most other policies.

It allows you to change the death benefit, premium payments, and cash value.

While it has numerous benefits, it's not for everyone.

Make sure to consider all pros and cons outlined above before buying it.

Aleksandra Yosifova
Aleksandra Yosifova

With an eye for research, Aleksandra is determined to always get to the bottom of things. If there’s a glitch in the system, she’ll find it and make sure you know about it.