What is Graded Death Benefit Life Insurance?
Graded death benefit life insurance is a type of permanent life insurance that offers a death benefit that increases over time. It is designed primarily for individuals who may not qualify for standard life insurance due to age, health conditions, or other factors.
Key Features:
- Gradual Increase: The death benefit typically starts at a lower amount and increases in increments over a set period, often 2-3 years.
- No Medical Exam: Applicants usually do not need to undergo a medical examination, making it easier to obtain coverage.
- Accessible: It is an option for those with health issues that might prevent them from obtaining more conventional life insurance policies.
How It Works:
The policyholder pays regular premiums, and in case of death during the initial graded period, the beneficiaries may receive only the premiums paid plus interest rather than the full death benefit. After the graded period, the full death benefit becomes available.
Considerations:
While graded death benefit policies provide essential coverage, they may have higher premiums compared to other options and limited benefits in the early years. It is crucial to evaluate your needs and consult with a financial advisor to determine if this insurance type suits your situation.