Modified whole life insurance

A modified whole life policy offers lifetime coverage for a low initial premium that increases significantly after a certain number of years.

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Amanda Shih

Amanda Shih

Editor & Licensed Life Insurance Expert

Amanda Shih is a licensed life, disability, and health insurance expert and a former editor at Policygenius, where she covered life insurance and disability insurance. Her expertise has appeared in Slate, Lifehacker, Little Spoon, and J.D. Power.

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Modified whole life insurance is a type of whole life insurance that offers lower premiums for a short time (usually two to three years but occasionally up to five or 10), followed by a higher rate for the remainder of the policy. The initial savings may be tempting, but it’s not the best life insurance policy for most people because of the high premiums and complicated policy options.

What is modified whole life insurance?

Also known as modified premium whole life, a modified whole life policy comes with low introductory premiums. The premium goes up only once after the introductory period and then remains the same the rest of the time the policy is in force. Buying a modified premium policy is a way to obtain a higher death benefit sooner, before you’d normally be able to afford the premiums, instead of waiting to buy coverage or buying more coverage when you’re older.

Many modified whole life policies don’t allow you to contribute to your policy’s cash value during the introductory period.

What’s the difference between standard whole life and modified whole life insurance?

The two major differences between traditional whole life insurance and modified whole life insurance are:

  • Premiums: Standard whole life insurance has the same premiums for your entire policy, whereas modified whole life premiums change once.

  • Cash value: Your premiums begin to fund your cash value account right away with whole life insurance, but you will need to wait until your premiums go up with modified whole life.

While the differences may seem small, they can have a real impact on your finances. You may not lose out on much cash value growth over two years, but a longer introductory period can set you back. And you’ll be going without a key policy feature while paying 5 to 15 times more than it costs to get similar coverage under a term life policy.

→ Learn more about the different types of whole life insurance

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How much does modified whole life insurance cost?

The lower rates you’re charged early in your modified whole life coverage aren’t a discount — you’ll make up the difference with higher payments after the initial period ends. 

Based on Policygenius data, a 35-year-old male without complex health issues would pay $517 per month for a $500,000 whole life insurance policy. You might pay less than that for the first few years of a modified whole life policy, but you’ll pay even more than that for decades afterward.

Compare those costs to term life insurance, where the same 35-year-old male would pay $30.44 per month for a $500,000, 20-year term policy.

→ See more whole life insurance rates

Should you get modified whole life insurance?

Most people shouldn’t buy a modified whole life insurance policy. Traditional whole life is already more expensive and complex than you probably need. If you buy a modified whole life policy, you’re:

  • Committing to higher premiums in a few years, whether you can afford them or not

  • Losing out on cash value savings, one of whole life’s main benefits

  • Still paying much more for your coverage than you would for term life insurance

If you can’t pay your premiums when they go up, your policy will lapse and you could be liable for high surrender fees. More importantly, your family will lose out on your policy’s financial protection.

If you are seriously considering a modified whole life policy, carefully review your budget and consult with a financial advisor to ensure it’s the best choice for you and your family.

Frequently asked questions

How does modified whole life insurance work?

Modified whole life insurance provides lifetime coverage. You’ll pay a lower premium for a set number of years, then pay a higher rate for the remainder of the policy.

How is modified whole life insurance different from standard whole life?

Modified policies differ in their lower initial premiums, and you’re usually barred from contributing to your cash value during the modified premium period.

Who should buy modified whole life insurance?

Unless you know you need lifetime coverage and are sure you can afford the premium increase in the future, we don’t recommend buying a modified whole life policy.