Graded benefit whole life insurance

Graded benefit whole life insurance

This article will explain how the Graded benefit whole life insurance works so you can determine if it is best for you.

Graded benefit whole life insurance is defined as not paying the death benefit for the first two to three years unless the death is accidental.

In other words, a graduated death benefit is a policy that is available to people who have severe risk factors that make typical plans with instant coverage impossible.

The phrase graded benefit is most typically associated with Final Expense, Simplified Issue, and Guaranteed Issue plans. These plans are available from insurers without a medical exam or typical underwriting. Companies assume a substantial risk with graded death benefit plans since there is no underwriting. As a result, premiums are greater when compared to other forms of coverage.

Why Would I Invest in a Graded Benefits Policy?

This is a frequently requested question. First and foremost, there is no danger in purchasing a graded death benefit insurance policy. If you die within the waiting time, you will not lose the money. Your premiums, plus interest, will be repaid. All company’s graded benefit terms are unique.

Some businesses will even pay a percentage of the death benefit. An example of a 20% interest rate on premiums paid for a Year 1 Death is shown below. In Year 2, 20% of the death benefit will be paid. As can be seen, the entire death benefit is accessible beginning in year 3.

Who Is a Good Candidate for Graded Death Benefit Whole Life Insurance?

A graded benefit is a last-resort approach. Why? Because you’re purchasing insurance with a waiting period. There are two types of graded death policies:

  1. Simplified Issue
  2. Guaranteed Issue

To qualify for a Simplified Issue Graded Benefit insurance, you must answer medical questions. They’re dubbed “Simplified Issues” since the application asks a few key questions to qualify.

What is the difference between a simplified issue and a guaranteed issue?

Here’s a summary of the upsides and downsides of graded benefit Simplified Issue and Guaranteed Issue.

Key features

  • Simplified Issue offers greater face amounts – some corporations provide benefits worth more than $100,000. (This is much higher compared to Guaranteed Issue)
  • There are no health questions in Guaranteed Issue.
  • With Guaranteed Issue, you cannot be denied because of your health.


  • Guaranteed Issue has a lower face amount (up to $25,000).
  • The most costly option is Guaranteed Issue.
  • Both Simplified and Guaranteed Issue have benefit waiting times of 2-3 years rated.
  • It would be best if you answered the health questions with Simplified Issue.

What If I Fail the Health Questions?

This is where a Guaranteed Issue graded benefit comes into play. When you initially contact your independent agent, they will determine whether you qualify for any firms that can save you money (and get covered immediately).

If you do not qualify for Simplified Issue, your sole option for coverage is a Guaranteed Issue graded benefit policy.

What types of health concerns or qualifying questions would force you to choose a graded benefit policy?

There are a few possible scenarios where you might need to purchase a Guaranteed Issue coverage. Each company’s application may include various health questions, although the following are generally frequent.

The top three rated benefit life insurance companies

When we run quotations for our clients, these graded benefit firms usually have the best pricing. The following are the finest guaranteed issue companies:

  1. Gerber
  2. AIG
  3. Mutual of Omaha

Each of these businesses has an A.M. Best rating of “A” or better. This demonstrates that they are financially sound and have a good reputation. Check out our assessments of AIG, Mutual of Omaha, and Gerber to discover more about these firms. Again, these are simply a handful of the firms that are accessible. Your agent should ask you health-related questions like the ones listed above to determine the right sort of policy and business for you.

How Do You Choose the Best Graded Death Benefit Life Insurance Policy?

We cannot emphasise enough the value of working with an independent agent to assist you to obtain the greatest items at best possible pricing.

Independent agents have access to a wide range of firms. When purchasing graded premium life insurance, we know which insurers give the lowest rates.

We hope that this post has provided you with a good understanding of these policies. They are an excellent option for many shoppers who would not otherwise be eligible for traditional coverage.

Still need help?

Get your quote online or call one of our agents at +1 (800) 340-7011