A graded benefit Whole Life insurance policy is one that pays a limited benefit during the first years. Most policies are graded from 1-3 years and most limit the graded part to natural death (death due to illness or old age). These policies usually pay 100% from day one for accidental death.
Grade benefit whole life insurance is generally the final coverage alternative for those who have been declined or are too sick to obtain traditional life insurance. The death benefit is a step increase, usually after the second year to protect the companies from risk aversion the first 24 months of the policy. By the fifth year the death benefit is generally level going forward.
Owner, Alma L Hesterberg & Associates, Baltimore, MD
Graded whole life policies are designed to allow a person who would otherwise be turned for traditional whole life insurance due to existising health conditions to purchase a whole life policy. They are usually offered and purchased as a small final expense policy. Because the policy is graded you won't receive full benefits for the first couple years. Benefits are limited to the premiums paid in plus and interest factor that is determined by the insurance company and this can vary depending on the insurance provider. Once a policy holder is past the first two to three years full benefits would be paid to the beneficiary.
Graded benefit whole life insurance pays out a reduced death benefit during the first 1-3 years that you have the life insurance policy, for death due to illness or old age. Sometimes the death benefit starts out very low in year one, then goes up a bit in year two, and so on until the policy pays 100%. Thus, the title, "graded".
Most graded life insurance policies will pay out 100% from day one for accidental death.
Graded life insurance pays back more than you paid in during the first graded years of the policy, and more than you would be able to get from a savings account. So certainly has its place for those who are unable to get a policy that pays 100% from day one for death by any reason.
.JPG){kind=avatar}
Most graded life insurance policies will pay out 100% from day one for accidental death.
Graded life insurance pays back more than you paid in during the first graded years of the policy, and more than you would be able to get from a savings account. So certainly has its place for those who are unable to get a policy that pays 100% from day one for death by any reason.