MODIFIED AND GRADED PREMIUM WHOLE LIFE INSURANCE

Looking for “GRADED BENEFIT WHOLE LIFE INSURANCE” instead? Click Here

(Graded Benefit Whole Life Insurance Is A Product For People With Conditions Difficult to Insure.)

What is Modified Premium and Graded Premium Whole Life Insurance?

Modified Premium Whole Life Insurance

Modified Premium Whole Life Policies are permanent life insurance contracts with level death benefits where the initial premiums that are much lower than regular straight whole life insurance during the first few years of the contract (usually five.) As a matter of fact, during the initial period, premiums for modified life insurance are only slightly higher than a term life insurance policy.

Modified Premium Whole Life Insurance

However, after these first few years of lower premiums, a modified whole life policy requires higher premiums when compared to straight whole life as the policy owner has to “make up” those years to fund the contract correctly so that the cash value will equal the death benefit at maturity. You can read about how all whole life insurance policies are designed by clicking here.

Graded Premium Whole Life Insurance

Graded Premium Whole Life Insurance

Graded premium whole life insurance is similar to modified whole life insurance in that premiums are in the first few years when compared to straight whole life insurance. However, instead of the premium “jumping up” all at once, a graded premium whole life contractsteps up” periodically so that they are higher than those of a straight whole life insurance policy.

A graded premium is different than a “graded benefit.” What does graded death benefit mean? You can read our page here to find out more.

Who Buys Modified or Graded Premium Whole Life Insurance

Because of their lower premium requirements in the early years of the life policy, modified and graded premium insurance contracts are a solution for individuals who want the lifetime death benefit protection, cash value, and the contractual guarantees a whole life insurance policy provides but have limited financial resources available today with the expectation that their financial situation will change in the future.

These features, along with some options, such as adding additional life insurance coverage without underwriting and disability waiver of premium, make graded and limited pay life insurance options a good fit for someone just starting out in their career or owning a growing business

These features make these contracts popular as a funding vehicle for BUY-SELL Agreements and Executive Compensation Programs.

Examples of People Who May Use Modified or Graded Premium Whole Life Insurance

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Options Other Than Graded or Modified Premium Whole Life Insurance

If you want to purchase death benefit protection but aren’t sure you want to make the long-term financial commitment required to buy graded or modified premium whole life, there are flexible alternatives.

First, in order to keep life insurance premiums low while having immediate death benefit protection, Term Life Insurance can be used. 

Most term life insurance contracts have a “convertibility” feature which allows a policy owner to convert the contract to a permanent life insurance contract in the future without having to show evidence of insurability.

This means the insured can have the insurance coverage they want and the ability to obtain permanent life insurance coverage in the future. You can get term life insurance quotes instantly at Decision Tree Financial by clicking here!

Second, the insured could design a universal life insurance policy that inherently has flexible premiums.

Looking for “GRADED BENEFIT WHOLE LIFE INSURANCE” instead? Click Here

(Graded Benefit Whole Life Insurance Is A Product For People With Conditions Difficult to Insure.)

Graded premium whole life has a reduced PREMIUM to acquire whole life insurance coverage that is scheduled to increase during a set period of time and eventually level out while providing a consistent death benefit amount. The “graded premium” makes whole life insurance more affordable in early years.

A graded benefit whole life insurance policy pays a lower benefit amount if death occurs during the first few years after the policy is purchased. Only after coverage has been in effect for several years is the death benefit increased to the actual stated face amount.

Learn about graded benefit whole life insurance here.

Businesses or individuals who want to acquire whole life coverage but don’t have the amount of cash flow to do so may choose these types of policy.

These may include businesses in a growth phase of their business, professionals just beginning their careers, or anyone that expects to receive a capital infusion in the future, at which time they would like the ability to leverage the benefits of whole life insurance.