What is Flexible Premium variable Life Insurance?

Flexible life insurance includes policies such as variable life, universal life, and adjustable life. Each of these policies differs from each other, having their own sets of features and characteristics. However, what’s common among these is their flexibility. This is a big advantage that policy owners have an option when it comes to face amounts, investment objectives, and premiums. They can modify these terms depending on the situation and their needs.

Flexible variable life is considered as securities-based whole life insurance. Insurance agents who are selling this kind of policy must have life insurance license that is valid and is registered with the National Association of Securities Dealers (NASD) by passing the Series 6 exam.

The aim of variable life insurance is to protect the policy owner and its beneficiaries from the attrition of their insurance dollars because of inflation. It offers cash value which policy owners can borrow or withdraw. Also, policy owners can choose to surrender the variable life insurance policy for its current cash value. It is required by Federal law that life insurance companies to provide prospectus to prospective customers before selling and offer a 45-day “free-look” period to them. In addition, policy owners should also be allowed to convert their policies to traditional whole life insurance within 24-month period from the time that the policy has been issued.

Variable life insurance has two types – flexible premium variable life and scheduled premium variable life. Flexible premium variable life policy is a combination of universal life insurance and variable policies. The premiums, death benefits, and cash value are variable. Scheduled premium variable life policy on the other hand, requires that premiums be paid on a periodic level to maintain the policy.

The premiums that are paid for variable life insurance are put in another account that is consists of mostly common stock, hence there is high risk on the investment of the policy owner. Because of that risk, federal government mandates the contracts of variable insurance and is being regulated by the Securities and Exchange Commission (SEC), National Association of Securities Dealers (NASD) and other federal agencies.