Graded Death Benefit

Life insurance policies usually offer one level death benefit amount. A policy with a graded death benefit offers a benefit that grows gradually over time.

For example, if the insured dies within the first year, the beneficiary may receive a death benefit equal to the amount of premium paid into the policy.

During the second year, the benefit might grow to include the premium paid along with a small interest amount.

Usually it is not until the third year that the face value of the plan would be payable on the insured's passing.

People who are in good health should probably not consider this type of coverage as they would be able to get better coverage for less money with a standard plan.

These plans make the most sense for people with a relatively short life expectancy, as after a few years of premium payment, the amount paid in may exceed the death benefit amount.



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