Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
A modified whole life insurance policy is characterized by:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A modified life policy charges a reduced premium during the early years — typically the first three — and a higher level premium thereafter for the rest of the contract. It is permanent insurance, so the premium adjustment is a one-time step-up in the schedule, not a yearly increase. This structure lets younger buyers afford a larger face amount early on, with premiums rising to the level the policy was designed to carry once the early period ends.
Why the other options are wrong
- B) A single lump-sum payment at issue describes single-premium life insurance, not a modified premium schedule.
- C) Premiums that increase every year with attained age describe yearly renewable term insurance, which is temporary and has no cash value.
- D) Premiums ceasing at age 65 describe a limited-pay whole life policy such as 'paid-up at 65,' not a modified life policy.
Memory hook
Modified = a cheap intro rate for three years, then the real level premium kicks in. A teaser inside a permanent policy.