What is graded benefit life insurance and how does it work?Graded death benefit life insurance is a type of no exam life insurance that provides a limited amount of death benefit over the first 2-3 years you are insured by the policy.
This type of life insurance may be most common with juvenile life insurance plans and life insurance policies for seniors.
Basically, if the insured person dies within the first 2 years of being insured by the policy, the amount of the death benefit paid to the beneficiary is limited to less than the face amount of coverage on the life insurance policy.
So, for instance, if the insured dies after one year, the death benefit would not be paid out, but the beneficiary may receive the premiums paid plus interest, or the beneficiary may receive the percentage of the death benefit, depending on the life insurance policy.
Graded life insurance policies are helpful in providing coverage to people who may have been declined by other insurers, such as, people who are high risk or over a certain age.
There isn't full death benefit coverage until the insured person has been insured for at least 2-3 years under the policy, depending on how the life insurance policy is set up. Learn more about
graded benefit life insurance plans.
