Modified Life Insurance: The Pros & Cons Explained

If you don’t have life insurance and you have health issues, you may think you’re out of luck.

Thankfully, you’re not. Modified life insurance, otherwise known as guaranteed life insurance is a viable option for you.

This form of life insurance doesn’t require a medical exam, which means anyone can qualify.

Here’s my review of modified life insurance to help you understand how it works.

What Is It

Modified life insurance is another name for final expense insurance.

It’s a form of whole life insurance that’s easier to obtain, yet has a waiting period. That’s where the term ‘modified’ comes into play.

Traditional whole life insurance is good for your ‘whole life.’ If you went through underwriting and a medical exam, chances are there isn’t a waiting period.

For example, if you passed a week after securing the policy, your beneficiaries would receive payment.

Waiting periods

Modified life insurance usually has a waiting period of 2 or more years. Some companies have waiting periods as long as 4 years

If you pass within that time (even of natural causes), your beneficiaries won’t receive a full payout. Instead, they will receive the premiums you paid plus interest (usually 10 – 30 percent).

It’s also called ‘modified’ insurance because you pay lower premiums at the start of the policy. The lower premiums last for a specific number of years, at which point the premiums increase.

Who Should Choose It?

There are a few people who should choose modified whole life insurance:

  • Anyone who won’t pass a traditional life insurance medical exam or underwriting
  • Anyone who can’t afford traditional whole life insurance premiums right now, but whose income will increase in the next few years

While there are other no-medical exam insurance policies, modified life insurance is attractive to those who want lower premiums than traditional guaranteed life insurance offers.

How Does It Work?

Modified whole life insurance plans are guaranteed no matter what health conditions you have- everyone qualifies.

However, you should know that most health issues don’t exclude you from a standard whole life policy.

For example, high blood pressure, depression, anxiety, type 1 diabetes, asthma, or Crohn’s disease aren’t automatic reasons for an insurance company to reject you.

If you have more serious health issues though, modified whole life may be a good choice.

Here’s how it works:

If you pass within the first 2- 3 years (varies by policy), your beneficiaries receive only a portion of your benefit, which is your premiums plus interest, usually 10%.

Let’s say, for example, you paid $2,000 in premiums and the policy pays 10% interest.

If you passed within the waiting period, your loved ones would receive $2,200 instead of the face value of your policy.

Pros & Cons


  • Anyone can qualify. It doesn’t matter if you have serious health issues, they can’t turn you down. If you don’t qualify for any other insurance policy, it’s a good idea.
  • The premiums never increase. Even though they are higher than what you’d pay on traditional policies, they never increase.
  • The policy has a cash balance which may grow over time. You may also tap into the balance if you need money.


  • The premiums are much higher than any other insurance policy because of the lack of a medical exam.
  • If you pass within the waiting period, your beneficiaries receive an extremely small amount of the benefit.

Modified Vs Whole Differences

Modified life insurance is the ‘backup’ for whole life insurance. If you don’t qualify for traditional whole life insurance, modified insurance is your next best bet.

Just like final expense insurance, it has a waiting period, whereas traditional whole life insurance typically doesn’t. This is the biggest difference.

If you pass the day after you get the policy, your beneficiaries would receive a full payout. There is no waiting period.

But, whole life policies usually have an intense underwriting process and require a medical exam.


Modified life insurance, like final expense insurance, has much lower coverage amounts. Insurance companies take quite a risk when they insure you without a medical exam.

They know the people who take these policies have serious health conditions, and even though they are protected by the waiting period, they still have to protect themselves.

They usually have coverage limits of $10,000 – $25,000.

Costs & Premiums

While every insurance company has different rates, here are some example rates.

  • Age 50 – $10,000 coverage – Male $38.00 and Female $28
  • Age 50 – $20,000 coverage – Male $76 and Female 55
  • Age 60 – $10,000 coverage – Male $57 and Female $45
  • Age 60 – $20,00 coverage – Male $112 and Female $88
  • Age 65 – $10,000 coverage – Male $68 and Female $54
  • Age 65 – $20,000 coverage – Male $136 and Female $107

Best Company Policies

Colonial Penn

Colonial Penn offers guaranteed (modified) life insurance. They market it for seniors who may not have money set aside for their final expenses. This company works a little differently though.

They work in ‘units’ which they sell for $9.95. Most people can purchase up to 8 units. The value of each unit depends on your age and health, but the units vary from $400 – $1,200.

The maximum premium for anyone (8 units) is $79.60 per month.

Mass Mutual

Mass Mutual is a leader in the insurance industry, so it’s no surprise that they offer a guaranteed (modified) whole life policy as well.

They offer policies with a face value of up to $25,000 and for ages 50 – 75 years old. The waiting period is 2 years, but it’s guaranteed acceptance, which means everyone qualifies.

This company pays 10% interest if you pass within the waiting period. Mass Mutual is secretive about their premiums, but we do know they are on the ‘higher’ side compared to competitors.

Physician’s Mutual

Physician’s Mutual also offers a modified whole life policy with a 2-year waiting period. The premiums or coverage never change and they pay 10% interest if you pass within the first 2 years.

The policy is available for anyone between the ages of 50 – 80 and in coverage amounts of up to $10,000.

Physician’s Mutual insurance rates are average for the industry. For example, a 50-year old female would pay $30.50 per month for $10,000 in coverage and a male would pay $42.

Common Questions

What benefit do your beneficiaries receive if you die within the waiting period?

If you pass within the waiting period, your beneficiaries will receive the total amount of the premiums you paid plus interest, which is usually 10%, but some insurance companies pay more.

Is modified benefit whole life insurance interest-sensitive?

No, a modified whole life policy is not interest-sensitive. Your policy grows a cash value over time, but it’s based on the posted interest rate.

Does modified whole life insurance face amount decrease over time?

No, the policy value never decreases. However, the only way your beneficiaries will receive the full amount is if you pass after the waiting period and not during it.

Can you cancel modified whole life and take the built cash value?

You can cancel modified whole life insurance at any time. If you earned any cash value during the time you had the policy, you’ll receive the cash.

What can the death benefit and coverage be used for?

The death benefit is best used for your final expenses or to supplement the costs your loved ones would experience if you passed away.

If you don’t have enough money saved or any other life insurance policies, it may be a good idea.

However, modified whole life insurance is the most expensive policy on the market. So before you choose this option, make sure you don’t qualify for any other policy.

If you do need it, make sure you shop around. Look for the best premiums and most comprehensive coverage available.

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