Modified Whole Life Insurance

Written by Advanced Mutual Group

MODIFIED WHOLE LIFE INSURANCE

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The best life insurance companies understand that their customer base can be expanded by offering different financial products. These financial products are designed to benefit the people in a variety of situations that can give them an advantage.

The standard whole life insurance that is tried-and-true is quite well-suited to the applicants in many phases of their life. However, for some people whose circumstances make the standard whole life insurance difficult to obtain, the modified whole life insurance policies can provide them a means of securing the protection and the stability of whole life under a structure that is slightly different.

Modified premium whole life insurance is a good fit for the people who may have some health issues but still want to get burial insurance.. These modified whole life benefit policies allow otherwise ineligible applicants to get the coverage.

There is a host of available riders that let the whole life policies provide supplemental protection for the policyholders. Whatever way you choose, you should make sure that the goal is to get the whole life coverage tailored to your individual circumstances.

 

How does modified premium whole life insurance work?

The modified premium whole life insurance is quite similar to the basic or traditional whole life insurance. The major difference between the two products lies in the premium structure of the insurance policy contracts. 

In the case of traditional whole life policy, the premium payments are flat throughout the life of the insurance policy. However, with the modified premium whole life insurance contract, the amount of premium is slightly higher than traditional whole life.

 One has to understand that the modified premium whole life insurance policy will typically lead to more money in total that is being paid to the life insurance company over the policy period.

It is debatable whether when adjusted for the time value of money, the insurance company makes more with the traditional whole life insurance or the modified premium whole life insurance. Generally, the policies are priced to be about equal from a net of a market return perspective.

 

The pros and cons of the modified whole life insurance

The most popular policy among the clients is the modified whole life insurance policy as it offers more benefits. There is no doubt that it has a few drawbacks here and there. We have to keep in mind that everything has its own advantages and disadvantages.

Nevertheless, if you understand the plan, this will enable you to make up your mind easily, whether to go with this policy or find another one. After all, you do want something that offers more advantages that you are looking for and little disadvantages that you will try to avoid.

Pros

Higher payments in the starting years

The main reason why many people tend to shy away from whole life insurance plans is to pay the premiums for many years without default. If you skip the premium payment even just a few times, your policy may be canceled.  There is a cash value with the policy so it may help pay premiums for a few months if needed.life insurance term

Provides a comprehensive protection

The beauty of the modified whole life policy is the fact that it provides comprehensive protection throughout your lifetime. As soon as the contract starts, you are given comprehensive coverage for the rest of your life.

It doesn’t actually matter how many times you have made payments. What really matters is if you pay your premiums on time. by the payments of your premiums. As long as there isn’t default yet, as a policyholder, you are safe.

 

  • Helps to build cash value

 

The incredible benefit of the modified whole life insurance policy is that it helps you build your cash value just like any other life insurance policies. If you happen to decide to cancel the contract today for any particular reason, the premiums that you have paid over many years just do not go up in smoke. You will obviously get a certain percentage of the premiums, the cash value will also accrue at a faster rate at the start, as compared to the level premium whole life product. In addition to that, you can cash out some of your premiums without necessarily terminating the contract. 

The cash value is tax-deferred

The best part about the cash value is that whatever you get is tax-deferred if you decide to terminate your contract. You can enjoy a temporary tax break on the cash value until after investing this money somewhere else, and the profit starts to come in. Therefore, your money will not be taxed before then.

Flexibility

The modified whole life insurance policy is more flexible than traditional life coverage. In the start, there is flexibility in premium payment, even if you are unable to pay it one month, it doesn’t matter much. You can also personalize your coverage easily in a manner that suits you in particular.

Dividends

The modified premium whole life insurance products are eligible for dividends, just like the traditional level premium whole life insurance. The dividend payments are actually higher in the first years because of the higher cash value as compared to the regular whole life policy.

These dividends can be used for the same purposes as the traditional whole life insurance, to pay the premium amount, purchase a paid-up insurance, or just for the purpose of income.

Cons

The premium remains the same after a set period

This fact makes no sense to the client that you start with paying premiums and continue paying with the premiums that remain the same throughout for life. It would have been quite better if it was the other way so that you go with less in the starting few years of the contract. Thus, you part with more from the beginning of the sixth or the eleventh year moving forward.

It takes time to build cash value

For many decades, you need to pay the premiums consistently before being eligible for a cash value. Cash in-hand has a little more value than future cash because of inflation and the decrease in purchasing power. Everyone has heard how a bottle of coke used to cost a nickel back in the 1960s and how you could purchase a nice house for just $30,000.

Therefore, getting the benefit of cash value requires much patience and financial commitment, which many people don’t have.

How much coverage do you need?

How much insurance coverage you actually require is a crucial factor to think about when looking for a policy. It all depends on your interests and how much benefit you want to get at the end of your insurance policy plan.Crohn's disease and symptoms

Whenever you decide about the coverage, you have to think about how much money you are expecting in the death benefits. This factor plays a significant role in the cash value as if the coverage is higher, and you will definitely get a higher cash value. The reason is simple, that when you are paying higher premiums, your cash value will obviously grow faster as compared to paying lower premiums.

There will be a list of various options that the insurance companies will provide you that you can go for. It is up to you to choose in a wise way as it depends on your desires and abilities as a customer.

You should also take a factor into account by considering the beneficiaries that you have and how much you are planning to leave for them. If you have a huge debt commitment that you have to take care of when you die, it is very important that you consider it when selecting your coverage.

How to buy a modified premium whole life policy?

Just like the other forms of insurance, you can compare rates from different insurance companies by requesting quotes, which is an essential step. Though you will ultimately need to purchase the whole life insurance policy from an agent like Mitch Winstead at Advanced Mutual Group.  there are many agencies that provide an excellent resource to compare quotes. 

After choosing the insurance company, you will need to work with an agent to get an application turned in, work through the underwriting process, and get your desired policy delivered to you. You can also get the information regarding the amount of life insurance that you may need.

Final thoughts

Modified whole life insurance is a perfect choice and offers flexible payment terms and cash value. Due to this, it can be a great choice for seniors who are looking to build solid financial security without a financially difficult commitment. This also includes the individuals who are looking to protect themselves but have a smaller amount of money in hand. It also works well for the ones who have the idea that they will gain access to the funds later on in their lives. 

In addition to that, the cash value is tax-deferred, and the ones holding the policy can be able to borrow the money from the cash value without any tax changes. It is worth noting that a modified premium is a whole life policy with a waiting period before the benefits are payable. Therefore, if the insured dies during this waiting period, the insurance company will refund the premiums plus interest that is usually 10%. After the waiting period is over, the full benefit can be paid out for any particular reason. Ask us the average cost of a funeral.

Hi, I’m Mitch Winstead with Advanced Mutual Group we have a Facebook page http://www.facebook.com/advancedmutualgroup.com  I have been helping people with burial insurance for over 20 years. Our policies are state-regulated  Our website is http://www.advancedmutualgroup.com

Our email address is mitch@allstarseniorbenefits.com

We have Mutual of Omaha burial insurance with no waiting periods. Compare us with Colonial Penn and Globe Life Insurance.

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Mitch Winstead Licensed Broker

 

About Advanced Mutual Group
About Advanced Mutual Group

We shop the life insurance market and do all the hard work for individuals across the nation to secure the best life insurance rates.

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