What is a graded benefit life insurance policy?
It’s a life insurance plan that provides a death benefit that increases with the age of the insured.
Graded benefits may increase gradually and then level off, or they may increase sharply before becoming level.
This type of life insurance coverage is most common in juvenile life insurance and life insurance plans for seniors.
Example: A senior life insurance plan providing $20,000 of life insurance coverage for a 10 year term with premiums of $300 and a 2 year graded death benefit period.
In this example the insured person pays the annual premium of $300 once a year for 10 years.
If the insured person dies within the 10 year term, the beneficiary receives the $20,000 death benefit.
However, if the insured dies within 2 years of purchasing the life insurance policy the death benefit paid will only be the amount of premium paid plus any interest on that premium.
If the insured were to die after the 2 year graded benefit period, more than 2 years after buying the policy, the beneficiary receives the full death benefit of $20,000.
In a graded benefit life insurance policy, the death benefits are not level. Policyholders will be paid a certain percentage of the full death benefit if death of the insured person should occur in year one, a larger percentage if death occurs in year two, and so on. By year five, most graded death benefit policies have reached a level death benefit of 100% of the coverage.
Premiums for graded benefit life insurance policies are generally higher than those for standard life insurance policies since the policyholder presents greater risk of a death claim to the insurance company. Even though the death benefit is not level, premiums are, the premiums remain the same each year of the policy.
What Life Insurance Companies offer Graded Life Insurance?
Here are a couple of the leading providers of graded life insurance:
Presidential life Guaranteed Issue Plans
Benefits payable under the Graded Benefit (whole) Life policy are limited in the first two or three years, depending on the issue age of the insured.
Guaranty Trust Life Insurance Company – Grade Benefit Whole Life
A graded death benefit policy means that the death benefit in the first three policy years is less than the full amount applied for.
The first year death benefit is equal to the amount shown in the death benefit table. In years two and three the death benefits increases (“grades”) until in the fourth year it equals the full amount.
What is an Alternative to Graded Benefit Insurance?
Globe Life Insurance offers simplified issue life insurance plans for people age 78 and under.
With Globe Life there is no physical just a few Yes/No health questions. You can get a life insurance quote and apply online for your life insurance policy in about five minutes.
When does life insurance coverage start? Is there a waiting period?
No. There is no waiting period. Your Globe Life Insurance coverage starts immediately when your policy is issued.
Will my coverage change as I get older?
Globe Life benefits will never be changed or reduced due to age, changes in health or occupation. ExtraLife benefits will never be changed or reduced due to age, changes in health or occupation.
Top Pick – Globe Life Insurance
Globe Life Insurance offers people age 78 and under up to $30,000 of term life insurance with just a few short health questions. Globe Life was established in 1951 and is rated "A+" Superior by A.M. Best for financial strength. Globe Life has more than 3.8 million policyholders. They provide a 30 day money-back guarantee. You can apply online in as little as 5 minutes. $1* starts your life insurance coverage! Apply online here!
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