Modified Premium Whole Life
Whole life with a lower premium in early policy years and higher premium in later years, easing entry for young buyers.
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Practice This Concept
Which statement best describes a modified premium whole life insurance policy?
Premiums are lower than the ultimate level premium during the first few years, then increase to a higher level for the rest of the policy — A modified premium whole life policy charges a reduced premium for an initial period (typically one to three years), then the premium steps up to a higher level premium and remains level thereafter. This is one of the premium patterns under objective LIFE-II.B.3, along with single premium, limited pay, and level premium. The higher premium is not an extra charge; it reflects the premiums that were reduced in the early years.
National insurance concept
A whole life policy is issued with premiums that start lower than the level whole life premium and increase each year for a stated number of years, after which they remain level for the rest of the insured's life. This product is best described as:
Graded premium whole life — Graded premium whole life (also called modified premium whole life) charges lower premiums in the early years, with the premium increasing each year for a defined period (commonly five to ten years), then leveling off at a higher rate for the insured's lifetime. It keeps the permanent, level-death-benefit features of whole life while reducing early-year premium outlay for applicants who expect income to grow. It is not a term product.
National insurance concept
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