Life Insurance Buying Tips

What Is Modified Benefit Whole Life Insurance?

Filed under: life insurance — Alston @ 8:14 pm September 13, 2011

Modified benefit life insurance is a life insurance contract that will not pay the full death benefit unless the insured lives for a minimum period of time after the effective date of his or her policy. If the insured person dies during this period of time, the beneficiary will typically receive an amount equal to the premiums paid plus interest.

This period of time is usually two or three years. This allows the insurance company to receive premiums for this period of time without risk.

Why would anyone buy a modified burial insurance policy?

People purchase modified policies because for two reasons. The first is because they don’t know any better. They may not believe that there are other policies available to them. The other, more legitimate, reason is that they don’t qualify medically for an underwritten policy.

These policies are typically purchased by seniors who are afraid that their medical condition would keep them from purchasing a policy that involves an exam or other medical underwriting. Sometimes this is true, but often a senior will qualify for a cheaper policy than they are offered.

Conditions like lung cancer and heart disease might prevent a person from qualifying for a cheaper policy. However, high blood pressure and high cholesterol and other common conditions are unlikely to impact one’s insurability.

Before agreeing to purchase a modified benefit policy, one should make sure that they investigate other life insurance policies to make sure that a better, cheaper policy isn’t available to them.

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