What type of life policy features lower premiums during the initial years?

A modified life policy is designed to have lower premiums during the initial years, making it attractive for individuals who may expect their financial situation to improve in the future. Typically, it offers a structured premium schedule where the insured pays lower premiums for a specified period—usually the first five to ten years—after which the premiums increase significantly to a level that could remain constant for the duration of the policy.

This structure allows individuals to access life insurance coverage at a more affordable cost during the early years, potentially aligning with their financial capabilities or expectations for income growth. Furthermore, after the initial lower premium period, the premiums adjust to reflect a higher cost associated with the continued coverage, as the insured ages and the insurance company's risk increases.

In contrast, whole life policies typically have consistent premiums throughout the policy's life, while term life policies offer low premiums but only for a limited period without any investment component. Universal life policies provide flexibility in premium payments but do not initially offer reduced rates as part of their structure. Therefore, the modified life policy stands out due to its unique approach of lower initial premiums, attracting those who anticipate an upward shift in their financial circumstances.