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Adjustable life insurance is a type of life insurance policy that you can adjust to suit your changing needs. Typically, you will choose the type of coverage you want, and the face amount, and then the life insurance provider will calculate premiums based on that face amount and your personal risk factors. Adjustable life insurance can be permanent or a term life policy. The type of coverage includes the duration of the coverage, too. The first adjustable life insurance policy was sold in 1971.

However, the phrase "adjustable life insurance" can also be used to refer to variable universal life insurance, a type of life insurance that builds cash value and which allows for the death benefit, savings plan, and premiums to be reviewed and possibly changed, again to allow the policy to be more flexible and able to meet the needs of a person's changing circumstances. Universal life insurance was first developed in the mid 1990s to be a relevant life insurance product in an age of increasing consumer financial sophistication. According to the Investopedia, "this type of adjustable life insurance "was created to provide more flexibility than whole life insurance by allowing the policy owner to shift money between the insurance and savings components of the policy. Premiums, which are variable, are broken down by the insurance company into insurance and savings, allowing the policy owner to make adjustments based on their individual circumstances. For example, if the savings portion is earning a low return, it can be used instead of external funds to pay the premiums."

But, getting back to the original concept of the adjustable life insurance policy, when you purchase one or go to review it you have a few things to think about. Basically, these are: how much death benefit do you want; how much can you afford in premiums; and what type of policy do you want? In reality, you decide on two of these elements and the life insurance company then tells you what the third element will be. The same holds true if and when you make adjustments to the policy. Different life insurers or plans may come with limitations regarding how frequently or by how much you can change your policy, and if you ever want to increase your face amount you will have to re-prove your insurability.

Nothing comes without its price. Adjustable life insurance policies are more expensive than the typical policy for the same coverage. This is due to the fact that they carry extra administrative costs for the insurance company. What's more, many people find these policies to be confusing; being confused with your life insurance policy is not good because it can mislead you about how much coverage you have, under what circumstances a death benefit may not be paid out, how much you are really paying for it, or how much the cash value pot within it is truly worth.

This was another reason why the variable universal life insurance policy was developed: it is more straightforward (though still requires one to have good customer service), and it's less expensive while potentially building up greater cash value reserves.

Adjustable life insurance is probably not needed by most people. However, it can be considered when putting together a long-term financial plan. Still, even within these circumstances, the best adjustable life insurance plan is probably actually the variable universal life policy

The author lives with her husband in Maryland, with their two dogs and cat. She put together the website http://www.affordable-life-insurance-guru.com in order to help the everyday person navigate the often confusing world of life insurance