Which is true about an adjustable life insurance policy?

Adjustable life insurance is a flexible policy that allows the policyowner to modify its key components—the face amount, premium, and period of protection—as their needs change. By adjusting the premium payments, the policy can be structured to function like either term insurance (with lower premiums and no cash value accumulation) or whole life insurance (with higher premiums that build cash value). This ability to alternate between providing temporary protection and permanent coverage with savings is the defining characteristic of an adjustable life policy.

B. Adjustable life policies that accumulate cash value are required by law to offer multiple nonforfeiture options, not just cash surrender.

C. Like all life insurance policies, adjustable life offers various settlement options for the beneficiary to receive the death benefit.

D. This is a life insurance product designed to pay a death benefit, not an annuity contract designed to provide retirement income.

1. Rejda, G. E., & McNamara, M. J. (2017). Principles of Risk Management and Insurance (13th ed.). Pearson Education. In Chapter 11, "Life Insurance," the text explains, "An adjustable life insurance policy is a policy that allows the policyowner to vary the premium payments, the face amount of insurance, and the period of protection... The policy can be converted from whole life to term and back again." (p. 223).

2. Virginia Bureau of Insurance. (2022). A Shopper's Guide to Life Insurance. Commonwealth of Virginia State Corporation Commission. This guide outlines standard provisions required in life insurance policies sold in Virginia, including nonforfeiture options (p. 11) and settlement options (p. 12), which contradicts options B and C.

3. Black, K., Jr., & Skipper, H. D., Jr. (2000). Life and Health Insurance (13th ed.). Prentice Hall. In Chapter 8, "The Life Insurance Product: General Classifications," the text describes adjustable life insurance as a product that "permits the policyowner to change the plan of insurance, raise or lower the face amount of the policy, and increase or decrease the premium." This flexibility allows it to emulate term or whole life characteristics.