These differences, while small in size, can significantly impact your financial situation. Even though you might not lose cash value growth for two years, an extended introductory period may cause you to be less successful. While you won't lose any critical policy features, you will pay five to 15 times more to get the same coverage under a life insurance policy.
Working with "captive agents" will limit your ability to sell one company. What if you have health problems?
What's the point?
The good thing about a whole-life modified policy is that people with severe health conditions can obtain new coverage. Modified life plans usually have little or no medical/lifestyle insurance. You can still get new coverage even if your condition is severe. Depending on your current health condition, you may need to modify your whole life.
Your premiums start to fund your cash-value account immediately with whole-life insurance. For most modified whole-life policies, however, you will need to wait until your premiums increase.
The death benefit protection stays the same, but the premiums aren't level.
The most important thing you must understand about life insurance is that no one company can be the best option for every person.
So if you want immediate Coverage, you have to answer health questions. There are no exceptions to that rule.
Modified Life Insurance: This is an ordinary life insurance policy, with premiums lower than standard policies for the first 3 to 5 years. The premiums for the standard Policy are higher in subsequent years.
a graded premium life insurance policy is a modified form ofUnderstanding that not all companies are the best for you is essential.
Last but not least, some companies might refer to modified whole lives plans as "final expense life insurance", "funeral Insurance", or "burial coverage".
You will still be paying more for your coverage.
The following are some common issues that you may be able to qualify for a non-modified whole-life policy.
Be aware that there is a 2-year waiting period for all company policies where there are no questions about your health.
Premiums: Standard whole life Insurance has the same premiums, but modified whole life premiums change only once.
Modified whole life insurance allows for lower premiums (usually for two to three years, but there are times when it can be up to five to 10 years). After that, the rate will increase for the rest of the Policy. The initial savings might be appealing, but it is not the best type of life insurance policy due to the high premiums and complex policy options.
You can borrow
While some companies charge as little as 8%, others charge as much as 30%. However, most companies offer 10% interest on premiums.
If you need senior funeral insurance, a modified whole-life policy might be your best option, but it may not.
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.
Still paying more for your coverage than you would for term insurance
CEO, The Annuity Expert. A Modified Endowment Contract, or MEC, is a life insurance policy modified from the traditional whole life insurance policy. A MEC offers tax-deferred growth and allows you to take out loans against the policy's cash value without penalty.
Modified whole life insurance 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.