Modified whole life insurance is permanent life insurance that starts with lower premiums for the first few years, then increases to higher, fixed rates for the rest of your life. Like traditional whole life insurance, it provides lifetime coverage and builds cash value. This structure works well if you expect your income to grow over time.
What Is Modified Whole Life Insurance?
Modified whole life insurance starts with lower premiums that increase later, ideal for those expecting a higher income and long-term financial growth.
Find out if you're overpaying for life insurance below.

Updated: June 19, 2025
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Key Takeaways
Modified whole life insurance provides lifelong coverage and includes a cash value component that grows over time.
Modified whole life insurance offers lower initial premiums and deferred taxes but can become more expensive in the long run.
A modified whole life policy is particularly beneficial for people who expect a rise in future income and need immediate coverage on a budget.
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Ensure you're getting the best rate for your life insurance. Compare quotes from the top insurance companies.
Modified Whole Life Insurance Policy Definition
How Modified Whole Life Insurance Works
Modified whole life insurance offers lifetime coverage with a different premium structure than standard whole life insurance policies.
You'll pay lower premiums for a set period: typically the first five or 10 years. After that, your premiums jump to a higher fixed amount for the rest of your life. This makes coverage more affordable early on if you expect your income to grow.
Like traditional whole life insurance, modified policies build cash value. You can borrow against this value or use it to cover future premiums or expenses.
This combination of low initial costs, lifelong coverage and cash value growth works well if you have a tight budget now but expect higher income later.
How Much Does Modified Whole Life Insurance Cost?
Modified whole life insurance starts with lower premiums than standard whole life policies, making it more affordable in the first five to 10 years. These premiums increase after the initial period, which can make the policy more expensive in the long run.
Modified whole life costs less than whole life early on but is usually more expensive than term life insurance overall, especially after the premium adjustment.
The exact cost depends on several factors, including:
Age
Younger applicants get lower initial premiums. Insurance companies view younger people as lower risk, which means lower starting rates for modified whole life policies.
Health Status
Good health can lower your premium rates. Better health reduces risk for the insurance company, leading to lower premiums during the initial years.
Smoking Habits
Smokers pay higher premiums. Insurance companies consider smoking high-risk behavior, resulting in higher premiums throughout the policy's life.
Occupation and Lifestyle
High-risk occupations or lifestyles affect premiums. Jobs or hobbies with higher risk lead to higher premiums since they increase the insurer's risk.
Understanding these variables provides insight into what happens to the premium in modified life policies and how individual circumstances impact the overall cost of modified life insurance.
Standard vs. Modified Whole Life Insurance
Both standard and modified whole life insurance policies offer lifelong coverage and include a cash value component. But how you pay for these benefits varies between the two. Here's how they differ:
Feature | Modified Whole Life Insurance | Standard Whole Life Insurance |
---|---|---|
Initial Premiums | Lower premiums in the early years, ideal for those with budget constraints or rising income. | Higher premiums from the start, but they remain consistent. |
Premium Increases | Premiums increase at set intervals, which can be surprising if not planned for. | Premiums stay level for the life of the policy, offering predictability. |
Cost Over Time | Can become more expensive over time due to premium increases. | May cost more upfront but can be cheaper in the long term with fixed payments. |
Pros and Cons of Modified Whole Life Insurance
Deciding whether modified whole life insurance is right for you means weighing the advantages and limitations. This choice affects your financial well-being and insurance coverage over the long term. Evaluating the pros and cons helps ensure your decision fits your future financial goals and current budget.
Pros and Cons
PROS
- Lower Initial Premiums: Modified whole life insurance starts with lower premiums, making it easier on your wallet early on.
- Lifelong Coverage: Like standard whole life, a modified policy covers you for life as long as you pay premiums.
- Cash Value Accumulation: The policy builds cash value you can borrow against or use for other financial needs.
- Deferred Taxes: The cash value grows tax-deferred, helping with financial planning.
- Potential Dividends: Some life insurance policies may pay dividends, though they aren't guaranteed.
CONS
- Increasing Premiums: Premiums rise at set intervals, which can strain your budget in later years.
- Higher Long-term Cost: The increasing premiums can make modified whole life more expensive than standard whole life over time.
- Limited Flexibility: Changing the terms or converting the policy can be challenging once you've committed.
- Potential for Lapse: If you can't keep up with the rising premiums, your policy could lapse and you could lose coverage.
What to Consider Before Getting Modified Whole Life Insurance
Deciding whether modified whole life insurance is right for you means looking at your current finances and future income prospects. Make sure the policy's features fit your long-term financial goals and current budget.
Modified Whole Life Insurance Is Right for You If:
- You expect a significant increase in future income.
- You need immediate coverage but have a limited budget.
- You want a policy with a cash value component.
- You value the tax-deferred growth of the cash value.
- You're confident in your ability to manage future premium increases.
Modified Whole Life Insurance Is Not for You If:
- You prefer stable, predictable premiums.
- You want the most cost-effective option over the long term.
- You want the flexibility to adjust or convert your policy terms.
- You prefer a straightforward insurance policy without complexities.
- You're concerned about the potential for policy lapse due to financial instability.
Is Modified Whole Life Insurance Right for You?: Bottom Line
Modified whole life insurance provides immediate, lifelong coverage with lower initial premiums that increase after a set period. It works well if you expect higher future income and want affordable entry into permanent life insurance.
Long-term costs may exceed those of standard whole life policies. Look at your financial trajectory to determine if this structure fits your long-term goals.
Compare Life Insurance Rates
Ensure you're getting the best rate for your life insurance. Compare quotes from the top insurance companies.
Understanding Modified Whole Life Insurance: FAQ
Here are answers to the questions we hear most about modified whole life insurance.
What is modified whole life insurance?
Modified whole life insurance is a policy where initial premiums are low but increase at set intervals. It offers lifelong coverage and a cash value component that grows tax-deferred. This structure works well if you expect your financial situation to improve, making budget management easier in the early years.
What is the premium for a modified whole life policy?
The premium for a modified whole life policy is the regular payment required to maintain your insurance coverage, just like standard life insurance.
In modified life policies, what happens to the premium?
In modified life policies, the premium starts at a lower rate and increases at set intervals. This design helps you manage costs while planning for future financial growth.
What happens when the premiums of the modified whole life insurance policy increase?
Premiums will rise at specific intervals outlined in your policy. This increase often results in higher long-term costs compared to standard whole life insurance.
Can I switch to a standard whole life policy later?
Some policies offer a conversion feature that lets you switch to a standard whole life policy. Read the policy terms to understand any associated fees or limitations.
Is the cash value of the modified whole life insurance affected by the premium increase?
The cash value continues to grow, but the timing and amount of your increased premiums may affect the rate of accumulation.
Can I borrow against the modified whole life insurance policy?
Yes, you can borrow against the cash value. The terms and interest rates vary, so make sure you understand the policy's specific conditions.
Is a medical exam required for modified whole life insurance?
Requirements vary. A life insurance medical exam is often required, especially for younger applicants or those seeking more favorable premium rates.
Can I cancel a modified whole life insurance policy?
Yes, you can cancel your life insurance policy, but expect potential surrender charges and loss of any benefits earned during the policy's existence.
Best Modified Whole Life Insurance Policy: Our Review Methodology
Why Trust MoneyGeek? We analyzed 1,488 life insurance quotes alongside customer satisfaction, financial stability reports, product offerings and more to determine the best whole life insurance companies.
MoneyGeek created a scoring system to compare life insurance companies across five categories and ranked them based on their scores. We chose to review these companies based on their broad national coverage and ability to provide online quotes.
MoneyGeek's Scoring System
In our scoring system, companies can earn up to five points in each of five categories. We then use these category scores to calculate an overall MoneyGeek score out of 100. We applied the following weightings to score insurers:
- Affordability: 30%
- Financial Stability: 25%
- Buying Process: 20%
- Customer Satisfaction: 15%
- Product Diversity: 10%
Each company's score incorporates:
- Cost data obtained through online quotes
- Financial strength ratings from AM Best and number of years in business
- Customer satisfaction data from the National Association of Insurance Commissioners (NAIC) customer complaint index (we reviewed annual complaint data from 2020 to 2022, the most recent year available)
- Availability of tools to help in the buying process, such as online product materials and multiple payment options
- Diversity of life insurance products offered
Sample Customer Profile
MoneyGeek used a standard profile to obtain life insurance quotes:
- 40-year-old male
- Nonsmoker
- 5 feet 11 inches tall and 175 pounds
- Excellent health rating
Premiums are based on the standard profile unless otherwise noted.
We modified the profile by age, gender, height, weight, tobacco use, health rating and geographic location to collect a variety of quotes and determine the best life insurance company for several types of customers. We collected quotes for term life insurance with varying term lengths and coverage amounts as well.
We identified trends in the data set and used those patterns to calculate projections and extend the data beyond what was originally collected.
Modified Whole Life Insurance Coverage: Related Articles
About Melissa Wylie

Melissa Wylie is a Content and SEO Manager at MoneyGeek. Melissa has worked in the financial content space since 2018 and has spent much of that time focused on all things small business.
Prior to joining MoneyGeek, Melissa held SEO positions at Bankrate and LendingTree. Melissa’s work has also appeared on LendingTree-owned websites ValuePenguin and MagnifyMoney.
Melissa began her career at American City Business Journals in 2015 as a reporter for the company’s women-focused publication Bizwomen. Melissa has a Bachelor of Arts in Journalism from the University of North Texas. Melissa relies on her foundation in journalism to craft content that simplifies complex financial topics to help everyone feel confident when making decisions with their money.
Melissa's other work can be read on LendingTree and Bizwomen.