Why Modified Whole Life Insurance May Be For You

When you want to buy a solid life insurance policy to protect your assets and your family but don't have a lot of money to pay into insurance premiums right away, a modified whole lifeinsurance policy may be the right fit for you.

What is Modified Whole Life Insurance?

Modified Whole Life insurance is very similar to Whole Life. It offers a guaranteed death benefit, builds cash value, and provides security for your growing family. The main difference between Whole Life and Modified Whole Life is that Modified Whole Life allows more flexibility with premium payments in the beginning of the policy, so that you can begin building value in your life insurance policy long before you can afford the large premiums typically associated with building that kind of value.


Because modified life policies offer flexible payment terms but still provide a guaranteed benefit, this type of policy can be a great choice for young families looking to build assets without a tough financial drain. The premium on modified whole life is set at a lower amount for the first five years of the policy and then increases in the sixth year. It will build cash value and may be eligible for dividend payouts. As with a whole life policy, the cash value is tax deferred and money can be borrowed from the cash value tax free.

Disadvantages of Modified Whole Life

The biggest disadvantage of modified whole life is that it does not build cash value as quickly as whole life. However, it does provide a lot of insurance protection for a relatively low price, and the policy can be customized to meet your specific needs.

Riders to Consider

When you purchase a modified whole life policy, you can personalize the policy by adding specific components. Some components you should consider include:

  • Accidental death - You can add an accidental death benefit to the policy, which would increase the death benefit payout if you die in in a covered accident.
  • Coverage for children - Most insurance companies will allow you to purchase very inexpensive policies to cover your children that can later be converted to some form of permanent life insurance.
  • Disability coverage - You can make sure you don't lose your life insurance policy by making sure your premiums are covered if you become disabled and can no longer work.
  • Living benefit - If you are diagnosed with a fatal disease and expected to die within a specified period, this rider allows you to access a portion of your death benefit before you die.

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