Graded Death Benefit Term Life Insurance

Securing a life insurance policy is consistently a wise policy. However, different policies are ideal for different situations and age groups. The graded death benefit term life insurance is one type of life insurance to consider.

Who Should Purchase Graded Death Benefit Term Life?

Graded death benefit plans provide a minimum of coverage without requiring a medical exam. They are ideal for those who cannot quality for other types of insurance coverage. For example, this typically includes those with unfavorable health histories. The ages for eligibility vary, but the scope tends to be from 60 to 80. Also, a maximum of protection available can exist as well.

How Does a Graded Death Benefit Term Life Policy Work?

Furthermore, graded death benefit term life insurance is granted with minimum underwriting or none at all. So if death transpires during a particular period of the policy (typically 2-3 years), then the return only includes the lowest graded benefits or the premium. During the first year, these policies typically pay a death benefit that is equal to a third of the policy's face value; during the second year they will pay ½ of the value; and in the third year, they will pay the pay value. It is even possible for the payer of the premium to spend more on premiums than the policy's face value! 

Advantages of the Graded Death Benefit Option

These policies have several advantages. The policy can earn a surplus, which could be implied in several ways. Also, the initial premium is lower, and lower than that for whole life insurance. Thirdly, the death benefit remains constant, which can be distributed in various ways. Finally, the policy possesses a cash value, which allows you to borrow up to a certain percentage of it.

Disadvantages of Graded Death Benefit Plans

However, this type of policy also contains disadvantages to consider. At first, the cash value increases slowly. During the first years of the policy's coverage, more of premium is dedicated to the death benefit. Secondly, after 5-10 years the premium is typically higher than other term policies.

At Rapid Decision Term Life, we can help you to determine if graded death benefit term life insurance would be ideal for you!

Start here by requesting a life insurance quote online—at no charge!