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You may be pulled by the excitement of modified whole life insurance. Who wouldn’t?

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You can have health issues and still get life insurance? Sign me up, right?

Not so fast. It’s not as good as it sounds. In fact, you may find that you’re wasting money on a product like this. It sounds attractive getting life insurance when you have health issues, but it’s not full coverage for at least two years, sometimes longer.

Most people don’t know that many common health conditions allow you to get health insurance on day one – no waiting.

Don’t Get Modified Whole Life with These Health Issues

If you suffer from any of these issues, don’t let someone tell you that your only option is modified whole life insurance.

Husband terminal illness
  • Diabetes – If your diabetes is under control, there are many life insurance options. Don’t settle for modified whole life. You may even get a policy with a medical exam and still qualify. You just need to prove your diabetes is under control. If you don’t take care of it, that’s another story. But if you’re taking your health seriously, you can do better than modified whole life.
  • Heart issues – Sure, if you had a heart attack 6 months ago, you may not get standard life insurance, but if your heart issues were in the past and you’ve improved your health since then, you’re in luck. Most insurance companies require at least 12 months, sometimes longer in between, when you had the heart condition and your application.
  • Mental health issues – Depression and anxiety aren’t deal breakers for life insurance companies. No life insurance company covers suicide anyway, so don’t think you have to take a such policy if you have mental health issues or were hospitalized before. Again, you must prove your condition is under control. If it is, you have a better chance at securing better insurance than modified whole life.
  • History of cancerHaving cancer in the past doesn’t mean you can’t get life insurance. You must be out of treatment for a couple of years and prove you are in good health now, but I’d much rather do that than take a policy with a waiting period of 2+ years.

Why you Shouldn’t Consider Modified Whole Life

There are many reasons not to get a modified whole life policy, but I want to focus on two big factors right now.

The waiting period is the largest issue. Why pay for a policy that you know won’t pay your loved ones for 2 or more years? Many policies go as long as 3 or 4 years. If you’re a senior, taking on a policy with such a long waiting period is a big gamble.

What happens if you die?

You just wasted money on premiums, and your loved ones won’t get a payout. You could have invested that money and left your loved ones with more than the insurance company will pay them. It’s like throwing money out the window.

Don’t do it.

The other reason is the premiums. They are high because the life insurance company knows they are taking a considerable risk. You have health issues, or you wouldn’t be looking at a modified whole life policy.

Life insurance is risk-based. The insurance company charges higher premiums for higher risks. If you have health issues, they’ll charge premiums accordingly.

There’s more.

The coverage amounts are limited. Most companies won’t provide coverage amounts higher than $10,000. At best, that’s a final expense policy – enough to cover your funeral expenses but nothing more.

If you need a policy just to leave a little something for your loved ones, maybe you could consider it, but if you’re looking for any type of ‘good coverage’, this isn’t it.

Alternatives to Modified Whole Life Insurance

Modified whole life insurance is often marketed to young people. Insurance companies figure they don’t need the coverage right away, so young people wouldn’t mind how it’s structured. But no one can predict what will happen in their life. Anyone can get in an accident or die suddenly and unexpectedly.

So what should you consider instead?

Term life insurance

Term life is good for a specific term. Say you take out a 30-year term. You have coverage for 30 years at the same payout and premium. If you are alive after 30 years, you must renew the policy or take out a new one, but you may be in a different financial place then and may not even need coverage.

Whole life

This is good for your entire life, and it builds a cash value. You can withdraw the cash value to supplement your retirement or even to use a large lump sum. The money you withdraw decreases your death benefit, but it’s like an automatic investment since some of your premiums get invested each month.

Simplified whole life

If you can’t pass a medical exam but don’t have any major health issues, you can get instant coverage from a policy with no medical exam. The insurance company will look at your health history and even your driving history to ensure you are a good risk. You’ll pay higher premiums but get immediate coverage.

Final Thoughts

Should you get modified whole life insurance?

I personally don’t think it’s a good idea for anyone. Even if you only need a final expense policy, the modified whole life policy doesn’t do anyone any good. It’s expensive, doesn’t payout for 2 – 4 years, and has such low coverage amounts that your loved ones won’t benefit much from it.

I suggest looking at your alternatives, comparing the premiums and the coverage amounts. Don’t jump at this policy because it allows you to get insurance without perfect health. There are plenty of policies available, including instant permanent life insurance that is a much better investment.