Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Which statement best describes a modified premium whole life insurance policy?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
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.
Why the other options are wrong
- B) A single lump-sum payment describes a single premium whole life policy, not a modified premium plan.
- C) Flexible, skippable premiums describe universal life, not a modified premium whole life contract.
- D) Life insurance premiums generally do not decrease with age; modified premiums increase once after the initial reduced period, then stay level.
Memory hook
Modified premium = cheap now, standard later. A step, then a flat line.