Final answer:
Policyowners can adjust the premiums of their universal life insurance typically at any time, within insurer guidelines.
Step-by-step explanation:
Universal life insurance policies offer flexibility that allows policyholders to adjust their premiums and death benefits. Policyowners can adjust the premiums of their universal life insurance typically at any time, within certain guidelines set by the insurer. This feature is advantageous for those whose financial situations may change over time, allowing them to adapt their life insurance coverage to suit current needs.
However, it is important to remember the fundamental law of insurance, which states that the average amount individuals receive from an insurance policy cannot exceed the average amount paid in premiums. Additionally, insurance companies need to cover their administrative costs and earn a profit. Therefore, while policy owners have flexibility in adjusting premiums, they must still ultimately fund the costs of their claims, and the insurer's operational expenses, and contribute to the insurer's profits.
State insurance regulators sometimes set rules to maintain low premiums, but this can lead insurers to avoid covering high-risk individuals or even withdraw from certain markets, as seen in the examples of New Jersey auto insurance companies and State Farm's property insurance in Florida. This regulatory environment reflects the complex balancing act between consumer protection and the viability of insurance companies.