Final Expense Insurance

What Is A Modified Whole Life Insurance Policy? Here’s The Truth.

Are you curious about modified whole life insurance?

It just might be your best option, but then again it may not.

We’ll explain how these plans work, show you actual prices and help you understand if you even need a modified plan.

You might be able to qualify for a non-modified plan that costs less and covers you right away.

You won’t find this information any where else.

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What Is Modified Whole Life Insurance?

Modified whole life insurance is a policy where there is a waiting period during the first 2-3 years. During the waiting period, the insurance company will only refund all your premium payments plus interest for any non-accidental death.

After the waiting period is over, the full benefit is payable for any reason.

A whole life insurance policy is very straightforward. Here’s the fine print you need to know:

  • Prices can’t increase over time
  • Coverage can’t ever decrease
  • Policy can’t expire at any age
  • Cash value builds up that you can borrow on

For modified premium whole life, some companies have a 2-year waiting period and some make you wait 3 years.

The interest granted varies by the company as well. It’s important to note the interest granted is based on the premiums you’ve made not the death benefit.

Some companies go as low as 8% and some go as high as 30%, but most companies grant 10% interest on your premiums.

For example, if a company grants 10% interest and you made $1000 in payments, you will get back $1100 (if death occurred during the waiting period).

Lastly, you might see some companies refer to modified whole life plans as “final expense life insurance“, “funeral insurance” or “burial insurance”.

The truth is, those are all marketing terms that mean the same thing. They’re referring to a whole life insurance plan with limited underwriting, so people with health conditions can still qualify.

A modified plan is just a type of final expense insurance.

 

Pros & Cons

Just like most things in life, everything has its pros and cons.

This is certainly true for modified whole life insurance.

The good: The best part of a whole life modified plan is the ability for folks with very serious health issues to secure new coverage. Most modified life plans have very limited or no medical/lifestyle underwriting. This means if you have dire illnesses, you can still get new coverage. Depending on the nature of your health issues, modified whole life may be the only way you can get a new life insurance policy.

The bad: Modified benefit whole life plans have two major drawbacks which are the waiting period & the premiums. These plans accept applicants who have very serious health issues. For that reason, the insurance company takes on a lot of risk. This is why the premiums are much higher than non-modified policies and have a waiting period of 2-3 years before the death benefit would pay out.

 

How Much Does Modified Premium Whole Life Insurance Policy Cost?

First, every insurance company will charge different rates for their modified coverage.

That said, below are modified whole life insurance rates to give you a relative idea about what it will cost you.

But keep the following in mind as you view these premiums.

  • It may be possible for you to get much lower rates (and coverage with no waiting period). Check out this section to learn more about that.
  • You aren’t limited to these amounts. You can have more or less coverage.
  • These prices are guaranteed acceptance. At minimum, it’s guaranteed that you could qualify for this coverage at these rates.
  • Premiums shown would never increase. The rate you pay when you start is what you’ll always pay.
AGEFemale
$10,000
Male
$10,000
Female
$20,000
Male
$20,000
50$28.14$38.41$55.37$75.90
51$29.43$39.51$57.93$78.10
52$30.80$40.88$60.68$80.85
53$32.27$42.63$63.62$84.33
54$33.92$44.37$66.92$87.82
55$35.84$46.11$70.77$91.30
56$37.68$47.76$74.43$94.60
57$39.69$49.59$78.47$98.27
58$41.80$51.88$82.68$102.85
59$44.09$54.27$87.27$107.62
60$45.14$56.65$88.27$112.38
61$46.52$58.67$91.04$116.42
62$48.09$60.78$94.18$120.63
63$49.91$62.98$97.81$125.03
64$51.97$65.54$101.93$130.17
65$54.51$68.29$107.02$135.67
66$57.18$70.77$112.36$140.62
67$60.04$74.25$118.41$147.58
68$62.70$78.65$124.18$156.38
69$65.63$83.42$130.35$165.92
70$68.75$87.91$136.58$174.90
71$72.42$74.66$143.92$147.32
72$76.27$99.92$151.62$198.92
73$80.39$107.25$159.87$107.25
74$85.07$115.50$169.22$230.09
75$90.29$124.49$179.67$246.98
76$100.65$138.42$200.38$275.92
77$110.31$140.90$218.62$279.79
78$117.34$150.59$232.67$299.17
79$125.29$161.57$248.58$321.14
80$135.12$175.15$268.25$348.30
81$145.42$189.37$288.83$376.73
82$157.12$205.52$312.23$409.04
83$171.74$240.72$341.47$479.43
84$186.93$267.93$371.86$533.86
85$204.20$298.86$406.41$595.73

 

Whole Life Modified Insurance Might Be Your Best Option, But For Most People It Isn’t

First, a modified premium whole life contract is at minimum guaranteed to be available to you.

So rejoice knowing that no matter how bad your health is, a modified plan is an option.

However, you may be able to qualify for better less expensive policies that offer full or partial coverage during the first two years.

Below are a bunch of common health issues where you very likely could qualify for a non-modifed whole life policy.

Before we go any further, let’s get some definitions out of the way.

If a plan isn’t modified, it will be one of the following options:

  • Full immediate coverage: This type of plan will pay out the full death benefit even if the insured passed away 2 days after the policy was issued. Insurance companies will often use the words “level”, “preferred” or “standard” to describe this type of plan.
  • Partial coverage: This type of plan will pay out only a portion of the death benefit during the first two years. They usually pay out 30-40% of the benefit during months 1-12, and 70-80% during months 13-24. Carriers will usually use the word “graded” to describe this type of plan.

Please know, your ability to qualify for partial or full coverage plans depends on the following factors:

  • Age
  • State of residence
  • Overall health

That said, if you have any of the issues in this list, call us at 1-800-644-2926. One of our agents will have a quick conversation with you to figure out if you can get a plan that has immediate coverage (and will likely costs less).

Know this…

At Choice Mutual over 90% of our clients are able to qualify for a plan that has full or partial coverage during the first two years.

If you have these health issues, don’t assume you need a modified plan. You can probably do better. Call us- we are friendly and never pushy.

  • High Blood Pressure
  • Diverticulitis
  • Cholesterol Issues
  • Angina Chest Pains
  • Type 2 Diabetes
  • Insulin Usage
  • Diabetic Neuropathy
  • Type 1 Diabetes
  • Diabetic Nephropathy
  • Diabetic Retinopathy
  • Heart Attacks Over 1 Year Ago
  • Full Blown Strokes Over 1 Year Ago
  • Cancer Over 2 Years Ago
  • Cancer >1 Year <2 Years (partial coverage only)
  • Mini Strokes
  • Blood Thinners
  • Disability
  • Blood Clots
  • Water Pills
  • Arthritis (All Kinds)
  • Asthma
  • Crohn’s Disease
  • Atrial Fibrillation
  • Graves Disease
  • Bi-Polar Disorder
  • Schizophrenia
  • Depression
  • Anxiety Medications
  • Scleroderma
  • Chronic Kidney Disease
  • Blindness
  • COPD, Emphysema, & Chronic Bronchitis
  • Liver Cirrhosis
  • Sarcoidosis
  • Hepatitis A, B, Or C
  • Congestive Heart Failure (partial coverage only)
  • Cystic Fibrosis
  • Defibrillator Or Pacemaker
  • Epilepsy
  • Fibromyalgia
  • Home Health Care
  • You Need Help With Actives Of Daily Living
  • Chronic Kidney Disease
  • Systemic Lupus SLE
  • Alcohol/Drug Abuse within 2 years (partial coverage only)
  • Parkinson’s Disease
  • Multiple Sclerosis
  • Morbid Obesity
  • Seizure Issues
  • Sleep Apnea
  • Non-Cancerous Tumors

 

Regardless Of Your Situation, This Is How You Get The Best Price

The most important thing you must understand about life insurance is that it’s impossible for any one company to be the best option for every person.

Why do we say that?

It’s because life insurance companies compete with one another via price and underwriting.

For example, lets say ABC insurance company excels at insuring diabetics and offers them rock bottom rates. Their underwriting is set up to work that way.

Meanwhile lets say XYZ insurance company isn’t be very fond of diabetics. They might deny them or charge them much higher prices.

If you’re a diabetic, your pocketbook and family won’t appreciate XYZ company because they’ll deny you or at minimum charge you much more than ABC company.

At the end of the day, your best policy would be with whichever company offers the best rates and coverage to a diabetic.

No insurance company can cater to every single health issue. They have to pick and choose where they are competitive for certain health conditions.

So to get the best price you must at all costs work with a broker (aka independent agency) who can shop dozens of life insurance companies. They will match you with whichever one views your health most favorably. That’s where you’ll get the best coverage for the least amount of money.

If you work with what’s called a “captive agent”, they will only be able to sell you the one company they represent. But what if that company dislikes your health issues?

Well too bad you’re out of luck because a captive agent cannot offer you another insurance company.

Be it Choice Mutual or another agency, the only way for you to truly get the best coverage at the lowest rate is by working with an independent agency that have access to 15 or more life insurance companies.

 

How To Qualify For A Policy That Has No Waiting Period

As we mentioned in this section of this article, there are policies out there where they don’t make you wait 2-3 years before the death benefit is payable.

As a short recap, there are partial coverage plans that payout a portion of the death benefit during the first two years and there are plans that will pay out 100% of the benefit right away.

Here’s the most important thing to understand.

Immediate coverage policies are something you must qualify for. You won’t have to take an exam, but at minimum you will have to answer health questions and be approved.

Remember that any policy from any company where there are no health questions there will always be a 2-3 year waiting period.

So if you want immediate coverage, you have to answer health questions. There are no exceptions to that rule.

 

Frequently Asked Questions

Below are most of the commonly asked questions and answers about these modified whole life contracts.

If you have a question that isn’t answer here, email us at info @ choicemutual.com

Within 48 business hours we will post your question with the answer on this page.

What does modified whole life insurance mean?

A modified whole life insurance policy is a plan that has a waiting period of 2-3 years before the death benefits are payable. If the insured were to die during the waiting period, the insurance company will only refund premiums paid plus interest. In addition to the waiting period, modified plans also cost more money per month compared to a non-modifed plan.

 

Is modified whole life insurance interest sensitive?

No, a modified whole life policy is not interest sensitive. It will build up cash value that grows every time you make a payment. In addition, the cash value account earns interest causing it to grow further. You can borrow from the cash value if you need money in a bind.

 

What is a modified premium whole life policy?

It’s a whole life policy with a waiting period before benefits are payable. If the insured dies during the waiting period (usually 2-3 years), the insurance company will refund premiums plus interest (usually 10%). After the waiting period is over, the full benefit will pay out for any reason.

 

What is cash value of modified whole life insurance?

The cash value will vary based on A) how much coverage you buy B) your month payment and C) the insurance company who issues the policy. When you get your policy, you’ll see a table showing you how the cash value grows over time.

 

How does Colonial Penn modified whole life insurance work?

Colonial Penn’s guaranteed acceptance policy is a modified whole life plan, and it’s sold by the unit. The most you can buy is 8 units. During the first two years, Colonial Penn will refund 108% of premiums paid for non-accidental death. After two years, it will pay out the full amount.