Which of the following statements is true regarding modified life insurance policies?

Modified life insurance policies are designed with a specific premium structure that differs from traditional whole life insurance. One key characteristic of these policies is that they feature lower premiums during the initial years of coverage, typically the first five to ten years. After this initial period, the premiums increase to a higher, fixed amount that remains level for the remainder of the policy. This structure allows individuals who may have tighter budgets at the start of their coverage to still secure a permanent form of life insurance while planning for future premium increases.

Understanding this payment structure is essential for consumers, as it highlights the trade-off between affordability in the short term and potentially higher costs in the long term. The eventual increase in premiums aligns with the design of modified life insurance to make initial coverage more accessible, particularly for younger policyholders or those new to life insurance who might be focusing on lower out-of-pocket expenses initially.