lexible premium adjustable life insurance is a type of whole life insurance policy that offers individuals the greatest amount of flexibility in terms of their investment choice and monthly premiums. It provides both a death benefit and an investment vehicle. Many individuals opt for such a policy because it provides a form of forced savings for retirement, while also protecting dependents in the event of premature death.
The first key to understanding this type of insurance is understanding whole life insurance policies. Whole life policies are distinct from term life because the death benefit on a whole life policy is paid no matter when the insured dies. With term policies, the death benefit is paid only during a set period; for example, for his beneficiaries to collect the death benefit on a 30-year term, the insured would have to die within the 30-year period that the policy was active.
With a whole life policy, premium payments continue for life and the death benefit is paid no matter when the insured dies. Premiums for this type of policy are generally more expensive than those for a term policy. They are also more expensive because the insured pays another fee, over and above the cost of insurance, which is invested in various types of investment vehicles.