Variable Pay Life Insurance

Updated: 09 June 2023

What Does Variable Pay Life Insurance Mean?

A variable pay life insurance policy refers to a universal life insurance policy in which the policyholder has the option of varying the premium amount payments to the insurance company based on the convenience of the policyholder. The insurance company typically provides a pre-determined range of limits for the premiums that the policyholder needs to pay for keeping the policy in force. As long as the premiums paid by the policyholder fall within this given range, the policy remains active. However, because the premiums paid by the policyholder vary in these policies, it is worth noting that the death benefit paid and the accumulation of cash value in the policy will vary accordingly as well.

Insuranceopedia Explains Variable Pay Life Insurance

Variable pay life insurance policies belong to the category of variable universal life (VUL) insurance. These policies typically accumulate a cash value that the policyholder can invest in a wide range of separate accounts.

Because the insurer invests some portion of the premiums paid in stock and/or bond markets, the cash value accumulated in these policies varies. This is why these policies bear the term “variable” in their names.

In addition, the “universal” component in the name of these policies refers to the flexibility given to the policyholder for paying the premiums. The policyholder can vary premium payments based on personal convenience. Some insurers provide a range for premium amount payments. Others allow the policyholder to make no payment or a maximum payment as specified by the Internal Revenue Code for life insurance.

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