by 
The Curious Bag
-
Modified whole life insurance is a type of permanent life insurance. The premium payment schedule adjusts during the life of the contract, which is why it is called modified whole life insurance.
Modified Premiums
The premium payments for a modified whole life insurance policy change once during the time that the policy is in effect. The payments start out at a lower rate, then change to a higher rate on a predetermined date established when the policy is purchased.
Premium Calculation
The total amount of premiums owed for the policy is calculated and then configured so the lower initial premiums are paid for a certain number of years, then adjust to the ultimate premium for the remainder of the contract. Common initial premium periods are five or 10 years.
Cash Values
This type of policy has cash-value accumulations. Cash withdrawals are allowed up to a pre-set limit spelled out within the policy.
Policy Loans
Modified whole life insurance policies offer policy loans. The loan amount plus interest owed will be taken out of the death benefit amount before distribution upon the death of the insured if the loan has not been repaid.
Income Tax
Income tax liabilities are not incurred on cash values as they accrue, and only the amount of cash value that is greater than the amount paid in premiums is subject to income tax.
Source:
RELATED QUESTIONS
Copyright 2023, Wired Ivy, LLC