Adjustable Premium

Definition - What does Adjustable Premium mean?

An adjustable premium is a premium on an insurance policy that does not remain at a fixed price indefinitely but can, rather, be altered throughout the policy life. A policyholder may want to alter their premium based on the performance of investments, changing life circumstances, desired benefits, or other factors. Adjustable premiums are very common in life insurance policies.

Insuranceopedia explains Adjustable Premium

If an insurance company is forced to pay more money than it was anticipating on a policy with adjustable premiums, then the premiums may go up in price. So, adjustable premiums can benefit insurers as well as policyholders. If an insurance policy does not have adjustable premiums, the premium prices will remain the same month after month until the policy is cancelled or amended. Adjustable premiums are appealing to people who anticipate changes to their circumstances.

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