Modified Term Life Insurance Definition

Modified term life insurance is a combination of three kinds of insurance: life insurance, which covers funeral expenses and other end-of-life expenses while giving your loved ones financial support upon your death, term insurance, which offers coverage only during the insurance’s term (usually five to 20 years), and modified insurance, in which the premium payments usually start lower than they normally would be and increase over time.

So, a modified term life insurance policy would offer insurance coverage for a set amount of time and have premium payments that either increase or decrease as time goes on.

Who needs modified term life insurance?

Modified term life insurance is beneficial for anyone who wants a limited amount of coverage at a potentially more affordable rate.

For example, a person may only want to be covered until their child reaches majority age or until they are old enough to retire but cannot afford the full premium cost immediately. Alternately, a person may only want coverage until they retire and want the rates to start at a full price and gradually decrease over time. A new graduate may want temporary coverage until they secure employment that may offer them affordable whole life insurance.


Modified term life insurance offers several advantages: It can be set up to automatically renew or even, after a set period of time, convert into a permanent life insurance policy. It offers an affordable way to protect your loved ones and dependents should anything happen to you. Most modified term life insurance policies will cover funeral and end-of-life expenses. The policies also give you the freedom and flexibility to choose a term length that suits your needs without being locked into a lifelong contract.


Unlike whole life insurance policies that offer coverage for the policy holder’s life, modified term life insurance only offers coverage during the length of the term. That means that if anything should happen to the policy holder after the term expires, there is no coverage. Also unlike most whole life insurance policies, modified term life insurance cannot be borrowed against or converted into cash assets later.

What to look for in a MTLF policy

A good modified term life insurance policy will cover funeral expenses and end-of-life costs while allowing the beneficiaries to not have to suffer financial hardship when the policy holder dies. It will pay the beneficiaries a combination of a lump sum and possibly continued payments upon the policy holder’s death.


Although term life insurance offers many options such as an automatically renewable policy or a policy under which the monthly premium payments stay the same for the length of the term, by selecting a modified term life insurance plan you may be excluding some of these options. Be sure to thoroughly understand all the options under a modified term that an insurance company presents to you.