What is interest sensitive life insurance coverage?

Interest-sensitive life insurance is a type of permanent life insurance policy that offers both a death benefit and a cash value component that grows based on the interest rate environment. With interest-sensitive life insurance, the cash value of the policy is tied to a specified index, such as the S&P 500 or the Treasury bond rate. As the index increases or decreases, so does the cash value of the policy. Interest-sensitive life insurance policies offer more flexibility than traditional whole life policies, as policyholders can adjust the premiums and death benefit amount as their needs change. Additionally, interest-sensitive policies offer the potential for higher cash value growth, especially during periods of high interest rates. However, they also come with the risk of lower cash value growth during periods of low interest rates. It is important to note that interest-sensitive life insurance is not the same as variable life insurance, which offers investment options and allows policyholders to invest in the stock market. Interest-sensitive life insurance is more conservative in its investment strategy and focuses on interest rate returns.