Modified Life Insurance: Everything You Want to Know

Should I buy life insurance for my children?

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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Benji Carr


Former Licensed Life Insurance Agent


UPDATED: Jan 10, 2022

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Quick Facts

Modified life insurance starts with a low monthly bill, then increases after a set period of usually five to ten years
Usually, modified policies are whole life, though you can find them in term life
Most major companies no longer sell modified life insurance plans in favor of convertible term plans

From providing for your family after your death to donating to a charity, there are many reasons to buy a life insurance policy.

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With term or permanent life insurance, your payment typically stays the same throughout the life of your policy. However, there are situations when a modified life insurance policy is better suited to your needs than a standard payment plan.

A modified life policy starts with low monthly payments. After a specified time – usually between five and ten years – the payments increase. There are many reasons to buy a modified policy instead of traditional insurance, especially if you’re looking to get whole life at a young age.

If you want to buy modified life insurance, shopping different companies can help you save money. Enter your ZIP code into our free tool to see what quotes might look like for you.

What is modified life insurance?

As of 2020, about 54% of America is covered by at least one life insurance plan. While some plans can be expensive, especially if you have health concerns, there are many affordable options out there.

Modified life insurance policies are mostly the same as traditional coverage. The key difference is that your monthly payment will increase after an agreed-upon amount of time. Your death benefit remains the same for the entire policy – it’s just the payments that change.

Usually, your rates only go up once. After the price increases, your monthly payment will probably be the same for the rest of your policy. Modified life rates are usually cheaper to start than traditional insurance but cost more after your rates go up.

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What types of modified life insurance can you get?

Most modified policies are whole life, but you can also find term. Whole life insurance and term life differ mainly in their duration. As the name suggests, whole life is meant to be a permanent policy covering you for the rest of your life. On the other hand, term covers you for a select period.

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Whichever you choose, a modified version works primarily the same as the traditional one. For example, a whole life policy still builds cash value that you can borrow against. However, many companies don’t allow you to contribute to that cash value until your rates go up.

Should you buy a modified life insurance policy?

Modified life insurance policies aren’t the best choice for everyone. Although the initial payment may seem tempting because it will be so cheap, it will get much more expensive. Modified life insurance would be an option to consider for the following people:

Families with one income provider but with another member that will earn an income later
People with children who will become adults before their rates increase, allowing them to commit more money to their insurance
People at the beginning of a career they are confident will give them a better salary as time goes by

A simple term life policy will cover all your needs for most people. If you want a whole life, it’s usually best to get a traditional policy. While you’ll know that the price increase is coming, you won’t be able to change it if it doesn’t fit your future budget.

The advantage of a modified policy is that it gives younger people a chance to buy a whole life policy when they might not be able to afford a traditional one. An individual who purchases a modified life insurance policy expects to lock in a death benefit early in life, but should be ready for the price increase.

Additionally, modified insurance can be more complicated than standard life insurance, and there might be fees. An agent will explain everything when you sign up for your policy and make sure that you understand when your rates will go up. Finally, you’ll pay more for a modified policy than you would for a standard policy, even though payments start lower.

What are the best modified life companies?

Today, modified life insurance plans are a dying breed. There are other, better options that make modified life insurance less appealing.

Typically, the larger companies don’t even advertise a modified life insurance policy. Even policies from smaller companies, such as the Colonial Penn modified benefit whole life plan, are disappearing.

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A new, more affordable plan has taken its place: convertible term life insurance. Convertible term policies bring all the convenience of a modified plan without the drawback of a giant price spike. With a convertible term, you have the option to turn your policy into a permanent plan at the end.

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What type of life insurance should you buy?

If you’re considering a modified life insurance policy, there are four main options to consider: the modified plan, convertible term life, standard term life, and whole life. The option best for you depends on your situation.

Typically, a standard term life policy will work best for most people. This is the most affordable option and, depending on which company you choose, you can probably renew the policy if you wish. Term life is excellent for people with young children, unpaid debt, or a partner they want to support after their death financially.

Whole life is more expensive than term but has a few benefits over term. First, you never have to worry about your policy expiring as long as you pay your bills. You also don’t need to worry about any health issues that might arise in the future preventing you from getting insurance.

A modified policy is a good option for people concerned about their health in the future. Even though you’ll pay more in the long run, you’re guaranteed coverage as long as you make your payments.

Finally, a convertible term plan is a good option for people that can’t afford whole life but want the choice later. One final thing to consider is that you won’t find a modified life insurance option at major insurance companies. You’ll have to choose term, whole, or convertible term if buying from a large company is important to you.

Find the Right Life Insurance for You

You know life insurance is an essential aspect of protecting your loved ones, but knowing which type of policy to buy can be confusing. While modified life insurance plans might seem convenient, there are probably better options out there for you. Speaking with a life insurance agent can help you sort through your options.

If you want to see affordable modified life quotes and other coverage types, you should look at as many companies as possible. If you’re ready to see what quotes might look like for you, enter your ZIP code into our free tool today.