What's the differences between modified premium and graded policies?

[shonceman]

Globe Life used to have a Modified Whole Life for kids.

A lot of companies had those back in the day. We used to call it a “Jumping Juvenile” policy. I’ve never sold it, although I don’t think it’s that bad of an idea. I’ve written plenty of children’s term riders that I later convert at age 25 to a whole life policy. The “Jumping Juvies” just made the conversion happen automatically.

Wouldn’t “The Jumping Juvies” be a cool name for a dance band?

 

[goillini52]

A lot of companies had those back in the day. We used to call it a “Jumping Juvenile” policy. I’ve never sold it, although I don’t think it’s that bad of an idea. I’ve written plenty of children’s term riders that I later convert at age 25 to a whole life policy. The “Jumping Juvies” just made the conversion happen automatically.

Wouldn’t “The Jumping Juvies” be a cool name for a dance band?

Yep, Globe's converted to whole life at age 25 or 26, and the premium went up at that time. They sold a lot of those through the mail. It was also a great door opener.

 

[WinoBlues]

Outside of the Final Expense world, “Modified Life” means something entirely different:
[EXTERNAL LINK] - What is Modified Life Insurance? - Definition from Insuranceopedia

I’ve only encountered an actual policy of this type a handful of times. I don’t think it’s sold much anymore because it’s easy replacement bait.

Protective had or has one they sold through Costco. Premium was lower in the first few years.

 

[Tahoe Ray]

Protective had or has one they sold through Costco. Premium was lower in the first few years.

I remember that. I think if you looked at all 20 or 30 years of premiums, it was the same total out of pocket as their traditional term.

 

[Spin]

Outside of the Final Expense world, “Modified Life” means something entirely different:
[EXTERNAL LINK] - What is Modified Life Insurance? - Definition from Insuranceopedia

I’ve only encountered an actual policy of this type a handful of times. I don’t think it’s sold much anymore because it’s easy replacement bait.

Is it the higher premiums that make it easily replaceable?

 

[WinoBlues]

I remember that. I think if you looked at all 20 or 30 years of premiums, it was the same total out of pocket as their traditional term.

Not sure if they have that.

CNA had one of the discounted smoker term policies. I used it just a couple of times with price shoppers. Almost everyone was pissed when they did not quit smoking and prices jumped. Fortunately I keep good note and had them sign the illustrations.

I imagine these premium graded plans were adverse selection as the healthy people bailed and the sick ones stuck.

 

[jdeasy]

Both have lower initial premiums, when is one used instead of another?

I think you are asking about two different things.

Modified/graded when referring to the benefit is true graded in one case, 30% of face first year, 70% second year then full face year 3. Some have a 3 year graded. Some are ROP plus interest first year then a % of face second year.

Modified is ROP plus interest for 2 or 3 years.

But companies will call ROP plans graded and sometimes graded they will call modified. There's no standard in the industry as to what they call those products. You just have to know what you're presenting by company. Or looking at if you run across it in the home.

These are when referring to the death benefit.

Modified premium is something else. Usually those will be UL's. But you will run across a modified premium whole life in the field sometimes. You just gotta read the contract. In those cases they are not talking about the death benefit. They are talking about the premium.

Yeah, I remember those old products after I posted. Haven't seen one in years. The closest I have seen lately is the AmAM?? product that rates a smoker as a non smoker and then the premium goes up in 3 years or so if the person does not quit smoking.

That would be the Americo product. You can't even write them as a smoker. Dumbest idea I've seen in the FE arena. Worst product I've seen this side of SNL's MIB plan.

 

[shonceman]

Is it the higher premiums that make it easily replaceable?

It’s mainly because clients bought it as a cheaper alternative to standard whole life. But they tend to either not understand about the future premium increase, or just don’t remember that part of the discussion (assuming the agent explained it properly).

As I mentioned, you don’t run into these very often. These days it’s much more common to run into an underfunded UL that was sold as the “cheaper” alternative.

 

[Allen Trent]

Wouldn’t “The Jumping Juvies” be a cool name for a dance band?

Would be a creepy pedo sounding name for a band

 

[WinoBlues]

Would be a creepy pedo sounding name for a band

Didn't even think of it like that.

Now, I am like ,Yew!