What is the definition of Flexible Premium?
A Flexible Premium refers to a premium payment type that allows the policy owner the freedom to change the amount of premiums he needs to pay at a certain time, as well as the frequency of the payments. This is subject to certain limits specified by the policy.
It is important, especially for life policies since these changes in the premium will have long term effects on the value of the policy. The policy owner has to insure that the cash value is adequate to cover for the cost of insurance. If the policy owner pays less regularly or at lesser amounts than expected, the policy may require higher payments the next time, in order to keep the policy in force.
What's best is to have annual reports from the insurance company so that the policy owner is updated as to the status of the policy and its cash value.
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