What is a graded benefit life insurance policy?

A graded benefit life insurance is method insurance carriers use to offer coverage for individuals who aren’t in the best of health and otherwise may not qualify for coverage by limiting the death amount payment should they die in the first two or three years.

For instance, if you bought $10,000 in coverage, a company will pay 40% if you died in the first year, 75% in the second year, and only in year three onwards will your beneficiaries be entitled to the full amount. When buying this type of coverage, you need to proceed with caution and first try to get a level benefit plan, which has no waiting period.