What Is Graded Benefit

Graded benefit is a term used largely in final expense and guaranteed issue type policies where the death benefit of the policy is suspended for the first two to three years, unless the death is accidental.

What does a graded death benefit mean?

A graded death benefit life insurance policy pays a lower amount if death occurs during the first few years after you purchase the policy. Unlike standard life insurance, the death benefit is only increased to the stated face amount after the policy has been in effect for two to three years.

What is the difference between level and graded insurance?

If you start with a graded premium, you have the option of changing to a level, fixed premium on your policy anniversary. When you change to a level premium, you lock in your rate at your attained age, the age at the time of the change. Level, fixed rates are usually about 40% more expensive than the graded rates.