Modified Whole Life Insurance: Everything You Want to Know

Modified whole life insurance offers lower premiums that increase after a five to 10 year period. You will pay more over time in life insurance premiums with a modified whole life policy. Modified whole life insurance works well for individuals who may not be able to afford whole life insurance premiums initially.

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Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Benjamin Carr was a licensed insurance agent in Georgia and has two years' experience in life, health, property and casualty coverage. He has worked with State Farm and other risk management firms. He is also a strategic writer and editor with a background in branding, marketing, and quality assurance. He has been in military newsrooms — literally on the frontline of journalism.

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Reviewed by Benji Carr
Former Licensed Life Insurance Agent

UPDATED: Jan 10, 2022

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The Lowdown

  • Modified whole life insurance is a type of insurance in which the premiums increase after the first five to 10 years of the policy
  • You will end up paying more for a modified whole life insurance policy than you will for a traditional policy
  • The amount you pay overall for life insurance will depend on a number of factors, including your age, gender, and health status

When you shop around for life insurance, you have a lot of different options you can choose from. Because of all the potential policies you can choose, you may want to take your time to decide on the best option.

One of the policies you may be interested in purchasing is a modified whole life insurance policy. Continue reading to gain more information about what a modified whole life insurance policy is, and learn whether you want a permanent life insurance policy.

When considering your different life insurance options, it’s important that you shop around to find the best deals on coverage. This will help you make sure you’re not paying too much for your life insurance policy.

In fact, you can use our free quote tool above to find and compare modified whole life insurance policies that fit your budget.

What is a modified whole life insurance policy?

A modified life insurance policy is created to allow the first five to 10 years of the policy to have cheaper premiums than the rest. This means that, after the set amount of time, your premiums with a modified life insurance policy will increase.

You can purchase both a modified whole life insurance policy and a modified term life insurance policy. But whole life insurance policies of this type are more common.

A modified whole life insurance policy will have rates that increase, but this increase only happens once. You will not have to worry about your life insurance rates going up once again in another five to 10 years. 

The death insurance benefit of a modified whole life insurance policy will stay the same throughout the duration of your policy as long as you continue to pay your modified whole life premiums on time.

If you are not sure whether a modified whole life insurance policy would work for you, you may want to look into other options, like a traditional or level whole life policy. This type of policy allows premiums to stay the same and never increase throughout the duration of the policy.

If you have a modified life insurance policy, it is likely that you will end up paying more for your insurance coverage over time than you would with a traditional whole life policy.

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Why do people buy modified whole life insurance if it’s more expensive?

If someone is looking for a modified whole life policy, it may be because they are currently unable to afford a regular whole life insurance policy with its premiums. So they purchase a modified policy with the understanding that they will have to pay more in a few years.

Similar to a traditional policy, modified whole life policies carry a cash value, but this value may be less than what you’d get with a standard whole life policy.

Additionally, modified whole life insurance will pay out the death benefit in its entirety to your beneficiaries regardless of whether you’re paying the initial premiums that are cheaper or the more expensive long-term rates.

How do I know what life insurance I need?

You won’t know what type of life insurance you need until you evaluate your unique circumstances. If you don’t know what type of life insurance you want, or if you’re not sure how much money you want to invest in the cash value of a life insurance policy, you may want to search for an adjustable life policy.

An adjustable life insurance policy will allow you to have flexibility when it comes to altering your policy in the future. This means you could change from a term life insurance to a whole life insurance policy, or it could mean you add riders to your policy after the first decade.

Adjustable life insurance is more expensive than other types of life insurance, but it will offer you flexibility when other policies are more rigid. A limited pay life policy could also be something of interest to you, especially if you don’t want to pay life insurance premiums after a certain age.

With a limited pay life insurance policy, you will pay a higher premium for a set number of years. After this, your policy will still be active, but you will no longer have to pay any out-of-pocket costs for the rest of your life.

How much does life insurance cost?

There are plenty of factors that impact your life insurance rates. These factors often include:

  • Your age
  • Your gender
  • Your health background
  • Your tobacco use
  • Your family’s health history
  • Whether you use tobacco products
  • Your job
  • The type of policy you want

If you’re a 32-year-old female with impeccable health, you can expect to pay lower premiums for life insurance than someone who is 65 and has diabetes.

Check out the table below to see how life insurance rates are impacted by your age, gender, and smoker status.

Average Annual Life Insurance Rates by Age, Gender, and Smoker Status

Policy Holder Age and Tobacco UseAverage Annual Rates: FemaleAverage Annual Rates: Male
25-year-old non-smoker$160.57$178.54
25-year-old smoker$248.75$321.76
35-year-old non-smoker$178.54$165.91
35-year-old smoker$321.76$286.18
45-year-old non-smoker$165.91$185.04
45-year-old smoker$286.18$360.23
55-year-old non-smoker$185.04$240.25
55-year-old smoker$360.23$493.20
65-year-old non-smoker$240.25$267.89
65-year-old smoker$493.20$637.51
Average annual rates for non-smokers$267.89$406.94
Average annual rates for smokers$637.51$991.63
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As you can see, virtually all life insurance policies become more expensive to purchase over time. And premiums for whole life insurance policies — especially as you get older — are much higher than those for term life policies.

You should always shop around for life insurance coverage to make sure you don’t end up paying too much for coverage. You can compare quotes from a lot of different companies and see what your average cost would be.

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Should I get a modified whole life insurance policy?

Purchasing a modified whole life policy makes sense if you are unable to afford traditional whole life insurance premiums but want to go ahead and purchase a whole life policy.

However, if you can afford a traditional policy, it makes more financial sense to do so as you will end up saving money over time. You’ll need to consider what you and your loved ones need when it comes to life insurance coverage before you choose any policy. Consider your investments and your debt, and get a policy that offers you peace of mind.

You can use our free quote tool below to find and compare life insurance rates for all sorts of different policy types today.

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