Life insurance is very important for anyone who likes to be prepared for the future. It gives you a back up plan and acts as a savior for your family if you were to suddenly pass away.
One of the types of life insurance policies also include modified whole life insurance.
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What is Modified Whole Life Insurance?
As per the modified whole life insurance definition, it is very similar to a traditional whole life insurance. It has the same features and the only difference between the two is how the premiums have been structured.
In a traditional whole life insurance, the premiums remain the same throughout the life of the policy. However, in a modified whole life insurance policy, the premiums are lower in the first few years after which they are likely to increase. The few years where you get low premiums depends on the insurance company that issued you the policy. However, it is most likely to be a period of five to ten years.
A modified whole life insurance provides a mutual benefit to the policyholder and the insurance company. The policyholder gets to pay lower premiums compared to other policies. The insurance company is also at peace since the risk of dying is not as much during the first few years of the policy. When the risk of dying increases, the insurance companies raise the cost of the premiums. Moreover, for the company, it is an added advantage as with a modified whole life policy, there is more money being paid through the course of the policy than with other life insurance policies.
However, it should be noted that even though the premiums are lower in the first few years and are subjected to change through the life of the policy, the face value of modified coverage whole life insurance essentially stays the same.
This policy also has a cash surrender value, same as all other basic life insurance policies have. Since the premiums are lower in the beginning, the cash value is also accrued at a slower pace.
Who is Modified Whole Life Insurance useful for?
Modified whole life insurance policies are useful for people who are likely to have expendable income in the future even if they do not have it now. This type of protection also requires life insurance so it can stay in effect for their whole life.
Candidates for a modified whole life insurance may include someone who is growing in their career and is bound to make more money over time, someone whose kids will no longer be depending on them, a family that only has one earning member but will have another sometime in the future. Modified whole life insurance is also bought by business men especially when a business is young and does not have the operating budget that it will have later.
Moreover, modified whole life insurance can be useful for individuals on a budget because insurance coverage when a person is young can be very important. People are at their healthiest age and applying at that age can guarantee that they will be insurable in the future and the modified whole life insurance rates will be as low as they can be since premium rates depend on the overall health rating and a young person is likely to get a superior health rating from underwriting.
A modified whole life policy is basically a way for people to accomplish their goals while still being affordable and providing the same level of protection for their beneficiaries.
How To Buy A Modified Whole Life Policy
Just like with other forms of insurance, comparing rates by requesting information from different companies is essential. Once you have decided what company is better suited for you, you will need to work with an agent so you can get an application turned in, get underwriting done and you will have a policy delivered to you. It is likely that with modified whole life policies that you will get low rates and coverage with no waiting period.
Modified Whole Life Insurance: Pros and Cons
Just like other life insurance policies, modified whole life insurance also has some pros and cons. We’ll look at the pros first.
Pros of Modified Whole Life Insurance:
The best part about a modified whole life insurance is that individuals with serious health issues can secure a new coverage plan without any hassle. If you know anything about insurance, you would know it is hard for people with poor health to secure a good coverage rate. If they do stumble across a company willing to offer them life insurance, the premiums would be exponentially high.
However, with modified whole life insurance, you would not have to worry about medical underwriting as most companies have limited to no underwriting.
Cons of Modified Whole Life Insurance:
Modified whole life insurance has two major drawbacks. One is the waiting period and one, the premium rates. Since these policies take on people with serious health conditions which are labeled high risk, they have higher premiums and a longer waiting period of 2-3 years before the death benefit could be paid out.
What do you have to do now?
So now that you know what is modified whole life insurance, whether or not it is right for you or how to buy it, you can speak to an insurance agent to find the best rates possible near you. All you will have to do then is fill out the form and you will be good to go.