Graded life insurance policies are a way for life insurance companies to offer life insurance coverage to persons who would be uninsurable otherwise, whether it be due to health reasons or age.
By restricting the payment of the death benefit coverage for the first 1-3 years for death due to natural causes, graded benefit policies help life insurance companies stay viable so they can be counted on to pay the death benefit for all their clients.
Graded life insurance policies generally pay 100% of the death benefit from day one for accidental death.
However, for death due to illness or natural causes, some plans pay out only what you paid in as premiums, plus a small percentage more during the first 2 or 3 years you are insured. Other plans pay a percentage of the death benefit and may only have a two year graded period, then provide full coverage after the first 2 years you are insured.
Here's how to get whole life insurance guaranteed issue with a grade benefit.
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