A type of life insurance policy that allows the policyholder to vary coverage based on needs. Some of the details that may change with an adjustable rate plan include variables such as the policy’s face amount, coverage period and premium.
The advantage of adjustable rate insurance is that, when a family is young and growing, rates may be reduced to help cover other living expenses. Once household expenses are reduced, however, more money can be paid toward the adjustable rate insurance policy, bringing its value up to date and current.
Depending on the type of life insurance policy purchased, an adjustable rate plan may provide both a death benefit and cash value accumulation in exchange for premium payments.