An indeterminate premium whole life insurance policy is a type of whole life insurance policy which does not use predetermined fixed premiums across the insurance term. Instead, the insurance company may adjust premiums to match its current costs.
A maximum premium is stated in the insurance policy, and the insurance company may not raise premiums above this maximum.
Typically, the premiums charged for indeterminate premium whole life insurance over the first several years of policy ownership are relatively low. These low initial premiums may only cover the actual insurance costs, without adding any cash value to the policy.
Premiums may increase in subsequent years in order to build cash value. However, they will never be higher than the maximum premium stated on the policy.
Indeterminate premium whole life insurance provides an option for individuals looking for life insurance coverage at an affordable premium while also accessing a cash value savings option.
However, as with other types of whole life insurance, the total costs of indeterminate premium whole life insurance are typically higher than those of term life insurance combined with a savings account at a bank.