An individual who purchases a modified life insurance policy expects which of the following?

• A. Premiums that decrease as the insured ages
• B. Lower initial premiums that increase after a specified period
• C. Decreasing death benefits over time
• D. Level premiums throughout the life of the policy

Answer: (B)

Verified step by step guidance

1. Understand the concept of a modified life insurance policy: This type of policy typically offers lower initial premiums for a specified period, followed by higher premiums later. It is designed to make insurance more affordable in the early years.
2. Analyze the options provided in the question: Evaluate each statement to determine which aligns with the characteristics of a modified life insurance policy.
3. Option 1: 'Premiums that decrease as the insured ages' - This is incorrect because modified life insurance policies do not have decreasing premiums; they start low and increase after a specified period.
4. Option 2: 'Lower initial premiums that increase after a specified period' - This is correct because it matches the structure of a modified life insurance policy, which offers affordability initially and adjusts premiums later.
5. Option 3: 'Decreasing death benefits over time' and Option 4: 'Level premiums throughout the life of the policy' - Both are incorrect because modified life insurance policies do not have decreasing death benefits or level premiums; they are characterized by changing premium structures.