Variable Pay Life Insurance
What Does Variable Pay Life Insurance Mean?
A variable pay life insurance policy is a type of universal life insurance that allows the policyholder to adjust their premium payments based on their convenience. The insurance company provides a predetermined range of premium limits that the policyholder must adhere to in order to keep the policy active. As long as the payments remain within this range, the policy stays in force.
However, since the premium amounts can vary, both the death benefit and the accumulation of cash value in the policy will fluctuate accordingly.
Insuranceopedia Explains Variable Pay Life Insurance
Variable pay life insurance policies fall under the category of Variable Universal Life (VUL) insurance. These policies typically build a cash value that policyholders can invest in a variety of separate accounts.
The term “variable” reflects the fact that the cash value fluctuates based on the performance of investments in stock or bond markets, as a portion of the premiums is allocated to these markets.
The “universal” aspect highlights the flexibility policyholders have in making premium payments. Depending on the insurer, policyholders may pay within a specified range, make no payment, or contribute the maximum amount allowed by the Internal Revenue Code for life insurance. This flexibility allows individuals to adjust payments based on their financial circumstances.
