Modified Whole Life Insurance Pros, Cons and Benefits


Taking life insurance is such a great thing. There are many benefits that one gets for having a life insurance cover. However, in some cases, you may find yourself wondering which is the most appropriate type of life insurance cover to take.

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Although there are many types of life insurance covers, they all come with their pros and cons. Modified whole life insurance cover is one of them. In this article, you will learn so much about this type of protection, its pros, cons, and the overall benefits.

What is Modified Whole Life Insurance?

It is a life insurance policy that covers you for your entire life. However, this type of policy is different from traditional types of life insurance policies. With traditional life insurance, the policyholder is required to pay the same amount of premiums all through until the end of life.

However, with a modified whole life, the amount of premium that you pay reduces at a specified period. It may be after 5 or 10 years based on your agreement with the insuring company. It is all about the type of deal you strike with the company.

Normally, the premiums are high at the beginning, but they reduce after some time.

Pros of Modified Whole Life Insurance

It is a form of forced savings

Saving is not easy, especially in the current times when the cost of living is raisin with time. As a result, many people surely find it challenging to save. Findings from the American government show that very few people have enough savings to cover them for an emergency above 1000%. This number is below 39%.

As a result, taking this policy is one sure method that makes you save even when you are not interested. Since you do not want your insurance policy to lapse, you will have to put your premiums among the list of bills to pay every month.

One good thing about this type of forced savings is that you are assured of some benefits at the end of it all.

Minimized payments at a specific time

Many people who have been paying insurance premiums will tell you that it is not easy. The truth is that it is not a simple job to keep on paying those premiums every month for the rest of the insurance life.

As a result, any small chance you get of offloading the burden is a great relieve to you. For the modified policy, there is a chance to reduce the burden on you for a few years. The payments can reduce for a period of between 5 and 10 years. For sure, this is a long period of grace.

It is a special case since in any insurance policies you will not get such an offer. It enables you to do other essential things from the payments you save.

You get whole life protection

What is better than having life insurance that will cover you for your entire life? With the policy, one of the advantages you get is that you are sure that you are covered until you die. In this case, it does not matter when you die, the policy will still cover you.

Being covers for your entire life is an important aspect that is worth going for. There are many benefits to getting this. In case you are leaving behind children with special needs, for example, it is the right way of giving them a better life once you have died.

Another case is when you are a business owner or part of business owners. Such a policy comes in handy in protecting the business. If you have been ailing, it is a way of giving your beneficiaries something to help them get back to their feet once you are gone.

Better Death Benefits

The policy has a pro over other types of policies when you die. When you have acquired a well-structured policy, you will have your benefits growing as you get older. This means that in case you die at a very old age, the benefits will be very high.

As long as you are paying your premiums, you can quickly get the benefits growing steadily.

Growing Cash Value

When you have a life insurance policy, cash value growth is one of the most amazing things that can happen. At least you feel you are gaining something as you continue paying your premiums. From this plan, you get the merit of growing cash value.

The cash value is guaranteed to grow based on the arrangement with the company. All you have to do is talk to your company and know how the cash value will be growing with time. Cash value growth becomes essential, especially toward the end of the insurance term.

Favored on Tax

Tax favor is a major advantage you get when you have the policy. With this type of policy, you will not have to worry about income tax on death benefits. Once you die, your beneficiaries will not suffer any tax on the benefits they receive.

Another area is when you want to withdraw any premiums from your policy, and there is no tax required.

In case you are taking policy loans, there are no taxes when you are operating on a whole life insurance policy. However, it is essential to note that loans will lower your death benefits.

Allows easy control

The policy allows better control over your policy. You can access so many things concerning your policy, including your cash value. With this type of policy, you are allowed to access your cash value money at any time. You can easily access the money in terms of a loan or direct withdraw.

As a result of this freedom, it is easy to use whole life insurance policy cash value to do other things in life that important. For example; you can borrow and invest the money in other businesses that can earn your income.

Offer Living benefits

One of the living benefits that you get is in terms of accelerated death benefits or terminal illness rider. For terminal illness, this is where you are diagnosed with a terminal disease that will give you just 12 months to live. In this case, you will be offered an accelerated death benefit at no cost. You are free to get your death benefits at that time.

In case you are also diagnosed with a chronic illness that will lend you unfit to work or perform certain activities, you can be allowed to access some of your death benefits earlier.

Cons of Modified Whole life insurance

Premiums rise at a certain time

Modified life insurance will have a rise in premiums at a certain period within your insurance life. As a result, this can be a challenging thing for one to deal with. An increase in premiums may come as an added burden to what you already have.

In case when you do not have a job or source of income, for example, it will be challenging to deal with the change. As a result, the chances of policy lapse are increased.

Death benefit not offered with cash value

It is a difficult case, but it is reality. Upon death, your beneficiaries do not get cash value as they receive the death benefit. As a result, this may force you to make use of cash value while you are still alive if you do not want the money to go to waste.

More complicated than traditional term insurance

In all cases, it is more complicated when compared to traditional term life insurance. With the policy, there are so many regulations and processes that you have to be familiar with. You also have to be okay with the fact that the final benefits will not be received until death.

Cash value takes time to grow

Although you will be getting the growth of your cash value as time goes, it will take a longer time when compared to other types of policies. This can be too long for some people.

Benefits of Modified Whole Life Insurance

  • You will get a cover throughout your life, unlike other policies such as term insurance.
  • You can easily withdraw your cash value or get it as a loan any time you want, which can help you deal with any needs in life.
  • Your beneficiaries will get to get good money as the death benefit grows as you age.


Modified Whole Life Insurance policy has both pros and cons. However, it is an excellent option to go for when you do not have something to cover within a short period. If you are patient enough, you will be able to benefit a lot from the cash value, and you can leave your beneficiaries with something good.