Modified Whole Life Insurance: Everything You Want to Know


Modified whole life insurance is a type of whole life policy that offers lower rates for the first 2-3 years. However, after this period is over, the rates increase and are often considerably higher than the average whole life insurance rates. Because of this, modified whole life is generally considered a high-risk policy. So, it’s important to carefully consider all options before deciding to buy modified whole life insurance.

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UPDATED: 2022-02-15T07:26:09.529Z
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What You Should Know

  • Modified whole life insurance rates are low for the first few years of coverage then increase after this period is over
  • Modified whole life insurance is similar to adjustable life insurance and limited pay life insurance
  • In general, modified whole life insurance policies are very risky

When it comes to buying life insurance, the two most common policies you can choose between are term vs. whole life insurance.

There are many different types of term life insurance and whole life insurance. Modified whole life insurance is one of many different types of whole life policies available.

Along with providing permanent coverage, modified whole life policies offer rates that are lower than average for the first 2-3 years of the policy.

However, after the first few years of coverage, rates become considerably higher than the average whole life insurance policy rates.

Modified whole life insurance policies are very complex, so it’s important to understand everything about modified whole life insurance before committing to buying a policy.

So what exactly is modified whole life insurance, and does the policy have any benefits? Keep reading to learn everything you need to know about modified whole life insurance and whether or not it's the right fit for you.

Looking for the best modified whole life insurance rates? Enter your ZIP code to get free quotes from modified whole life insurance companies near you.

What is modified whole life insurance?

Modified whole life insurance is a type of whole life policy that offers permanent coverage and a face value that never changes during your coverage period.

With modified whole life insurance, your rates are lower than average for the first few years of the policy.

This period typically lasts 2-3 years but may vary depending on the specifics of your policy. To find out how long your rates will stay low before increasing, you'll have to talk with your insurance provider.

During the initial period, your rates stay low and don’t change. However, your rates will increase after the first few years are up.

Usually, your rates after the set period will be considerably higher than the average whole life insurance rates. Because of this, and because the policy is very complicated, modified whole life insurance isn't a common policy.

How much does it cost to buy modified whole life insurance?

The average modified whole life premium can vary, but you’ll typically pay rates that are higher than average once the first few years of coverage are up.

For a 35-year-old male purchasing a $500,000 policy, the average rates for standard whole life insurance are $517 a month.

Modified life insurance will be at least this expensive, if not more. Because of this, modified whole life insurance isn’t typically a good idea for people looking for low rates.

Is modified whole life insurance similar to an adjustable life policy or a limited pay life policy?

Although modified whole life insurance is similar in some ways to both adjustable and limited pay life insurance, all three policies are very different overall.

The main similarity between these policies is the flexibility on rates that each policy offers.

For example, modified whole life insurance offers low rates for the first few years of coverage. With adjustable life insurance, you can adjust certain policy features like the rates and the death benefit to better suit your needs. A limited-pay life policy lets you prepay a portion of your rates.

While modified whole life insurance, adjustable life insurance, and limited pay life insurance all offer varying levels of policy customization, all three policies offer different levels of coverage and different benefits.

Should I buy modified whole life insurance?

In general, modified whole life insurance is a very complicated policy that isn’t worth buying for most people.

The initial low rates during the first 2-3 years of coverage don’t make much of a difference in saving you money, and the rates after that period are usually a lot more expensive than the average rates for a standard whole life insurance policy.

Although modified whole life insurance can be helpful if you need low rates currently but know you’ll be able to pay higher rates down the line, the policy is high-risk and doesn't have many benefits.

Are there any benefits to buying modified whole life insurance?

There are some benefits to buying modified whole life insurance. However, most of the benefits modified whole life insurance offers are also offered by standard whole life policies.

The main benefits of modified whole life insurance policies are the initial lower rates and permanent coverage the policy offers.

Another benefit of buying modified whole life insurance is that the face value of the policy doesn't change throughout the duration of coverage.

This means that even if you die during the first few years of coverage when your rates are lower, any beneficiaries you have named will still receive the full death benefit amount.

The Bottom Line on Modified Whole Life Insurance

Modified whole life insurance is a type of whole life insurance that provides lifelong coverage with lower initial rates.

The policy is similar to adjustable life insurance and limited pay life insurance, but all three policies offer different rate flexibility options at different costs.

In general, modified whole life insurance is complicated. While there are some benefits the policy provides, the risks of buying modified whole life insurance far outweigh them.

Before you buy modified whole life insurance, you should first make sure you understand everything about the policy. Then, compare your options to see what best fits your budget and gives you the coverage you need.

Looking for affordable modified whole life insurance? Enter your ZIP code to get free modified whole life insurance quotes from the top companies near you.

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