Modified Life Insurance: Everything you Want to Know

Modified life insurance is primarily the same as traditional whole or term life with one significant difference: your monthly bill does not stay the same. Your bill will be very affordable for the first few years, then will dramatically increase after a set time. However, the increase only happens once, and your death benefit remains the same. Today, it’s difficult to find an adjustable life policy since convertible term policies have replaced them.

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UPDATED: Jun 28, 2022

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Written By: Chris TepedinoReviewed By: Laura WalkerUPDATED: Jun 28, 2022Fact Checked

The Rundown

  • Modified life insurance plans start with low monthly payments that increase after a set period, usually between 5 and 10 years
  • Most modified plans are whole life, though you can buy modified term life plans
  • Modified life plans are being sold less often due to the rising popularity of convertible term life plans

Life insurance plans are one of the best ways to protect your family after your death. A death benefit can pay for medical expenses, funeral costs, and lost wages so your family can focus on grieving rather than stress.

With most life insurance plans, your payment stays the same for the entire policy term. Although not very common, a modified life insurance plan may meet your needs better than a standard policy.

Also known as an adjustable life policy, your monthly payments start low. After a specified period – usually five to 10 years – your monthly payment will increase.

The main reason to buy a modified life insurance policy is that maybe your current budget is tight, but you expect to make more money in the future.

If you think modified life insurance is the right plan for you, comparing quotes with different companies can help you save money. Enter your ZIP code into our free tool to see what quotes might look like for you.

What is modified life insurance?

About 54% of adults the U.S. are covered by life insurance as of 2020. Many Americans think life insurance is unaffordable, especially when they have health concerns. However, there are plenty of affordable options available.

What happens to the premium in modified life insurance policies? For the most part, these plans are the same as traditional coverage. The only difference is your premium. After an agreed amount of time, your rates go up.

Your death benefit remains the same throughout the policy — it’s only the premium that changes.

For the most part, your rate will go up just once. After the initial increase, you’ll likely pay the same amount for the rest of the policy.

One of the benefits of a modified plan is that payments are affordable at first. However, a modified plan is typically more expensive than other plans after the increase.

What types of modified life insurance can you get?

The most common modified life insurance plans are whole life, but term life plans are also available.

While term and whole life have many differences, the main one is the length of time the policy lasts. Whole life is a type of permanent insurance that will cover you from its activation until your death, as long as you make your payments.

Term life lasts for a specific period, usually between 10 and 40 years.

No matter which plan you choose, modified life works about the same as traditional. If you buy a whole life plan, you can still expect it to build a cash value you can borrow against. With a modified plan, your whole life probably won’t accumulate cash value until your rates go up.

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Should you buy a modified life insurance policy?

Modified life insurance policies aren’t the best choice for everyone. The initial payment can seem tempting because it will be so low. However, it can get expensive after the price jump.

Still, a modified life plan may be the best choice for the following people:

  • Parents with children who will probably leave the house before the price increase, giving them more expendable income
  • People starting a career that will give them a better salary in the future
  • Families with one income provider who will eventually gain a second

A simple term life policy will cover the needs of most people. Even if you want a whole life plan, it’s usually best to pick the standard model. With modified life, you can’t change the future price increase if it doesn’t fit your budget — you’ll have to cancel your insurance.

The true advantage of a modified plan is that younger people on a budget get the chance to buy a whole life policy.

A disadvantage of modified life is that they are usually more complicated and you might incur fees. If you decide to buy a modified plan, make sure that your agent explains everything to you. Ask the agent when your rates will increase and how much the new price will be.

Finally, you’ll pay more for a modified policy than you would for a standard policy, even though payments start lower.

Best Modified Life Companies

Most insurance companies no longer offer modified life insurance. Instead, you can buy convertible term life insurance. This is a much more convenient product that gives you the benefit of lifetime coverage if you want it.

With a convertible term policy, you get the low payments of term life with the eventual option to convert your plan into a permanent one later.

What type of life insurance should you buy?

If a modified life plan might work for you, there are four types of life insurance that you should consider: modified life, convertible term, standard term, and standard whole life. The best option for you will depend on your unique circumstances.

For the most part, a standard term life policy is the best choice. Term life is affordable and suits most people’s needs. This is an excellent option for people with kids or a large amount of debt.

Whole life is more expensive because it comes with more features. You never have to worry about your policy ending as long as you keep yourself in good standing. You also don’t have to worry about future health issues stopping you from getting affordable coverage.

A modified policy is a good option for people concerned about their health in the future. Even though you’ll pay more in the long run, you’re guaranteed coverage as long as you make your payments.

Lastly, a convertible term plan is an excellent choice for people who can’t afford whole life but want the choice later.

One final thing to consider is that you won’t find a modified life insurance option at major insurance companies. You’ll have to choose term, whole, or convertible term if getting insurance from a large company is important to you.

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Find the Right Life Insurance for you

Life insurance is essential for protecting your loved ones, but knowing which type of policy to buy can be confusing. Speaking with a life insurance agent can help you sort through your options.

While modified life insurance plans might seem convenient, there are probably better options out there for you.

If you want to see affordable modified life quotes and other coverage types, you should look at as many companies as you can. If you’re ready to see what quotes might look like for you, enter your ZIP code into our free tool today.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about insurance. Our goal is to be an objective, third-party resource for everything insurance related. We update our site regularly, and all content is reviewed by insurance experts.

Chris Tepedino is a feature writer that has written extensively about home, life, and car insurance for numerous websites. He has a college degree in communication from the University of Tennessee and has experience reporting, researching investigative pieces, and crafting detailed, data-driven features. His works have been featured on CB Blog Nation, Flow Words, Healing Law, WIBW Kansas, and C...

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Written by Chris Tepedino
Insurance Feature Writer Chris Tepedino

Laura Walker graduated college with a BS in Criminal Justice with a minor in Political Science. She married her husband and began working in the family insurance business in 2005. She became a licensed agent and wrote P&C business focusing on personal lines insurance for 10 years. Laura serviced existing business and wrote new business. She now uses her insurance background to help educate...

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Reviewed by Laura Walker
Former Licensed Agent Laura Walker

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