Unsure what graded life insurance is? Graded life insurance is a kind of policy with the purpose of insuring those difficult health concerns which other life insurance companies deny.
Maybe you have a medical condition which is hard to insure, or maybe you’ve already been declined for traditional life insurance.
If this is you, we can help you find affordable coverage.
If you are healthy, this is not the type of life insurance you’re looking for. Graded life policies have a specific use, and if you can qualify for regularly underwritten policies, this type of insurance won’t apply to you.
Graded Life Insurance
Someone who has health concerns which are not easily insured are faced with the tough battle to find a carrier who is willing to not only offer coverage, but do so at an affordable premium. Unfortunately, not all companies will agree to cover you because of unusually high risk.
Graded life insurance is a product which aims to solve both those issues. It offers the insurance carrier a way to mitigate some of its short term risk, and it also allows the person attempting to purchase the life insurance a way to do so at a much lower premium.
In a nut shell, graded life insurance is a policy which won’t pay out the full amount, and sometimes none at all, in the first months after a policy is issued. But after a pre-determined time period, the life insurance death benefit pays out 100% of its applied amount. This time period can be something like 24 months.
Here’s an example of a pay structure:
- Months 0-12: No insurance payout
- Months 12-24: 50% death benefit payout
- Months 24+: 100% death benefit payout
So as long as you live at least two full years after the day your graded policy is in force, then you can expect to receive the full death benefit amount so long as you continue paying your premiums.
Here are some frequently asked questions about graded life insurance, because it’s not a mainstream product offered by all agents. You will likely need an independent agent to work with, like us.
But What About My Premiums?
Good question. Obviously it’s a bit of a risk for you, the consumer, because if you pay your premiums on time over the first year and you die, it would seem to be a waste of money. But, here’s the good news. The cash you pay as a premium is often returned to your heirs if you pass in that time period. In some cases, the price you paid plus a bit of interest is returned as proceeds to your beneficiaries.
How Much Coverage Can I Get?
Because it’s not a traditionally underwritten life insurance policy, you can expect much lower death benefit amounts. The face amount might be anywhere from $5,000 to $50,000, for example. An insurance company would be at a much higher risk if it allowed significantly higher coverage amounts, because they know there’s a greater chance they’ll have to pay than someone who is your same age, yet healthy.
Can I Be Declined?
This depends on the type of graded life insurance you apply for, and from which company. One company may offer a graded term life insurance policy where they ask medical questions. This policy is not guaranteed, and you could be turned down. On the other hand, a company may offer a true guaranteed issued graded whole life policy where you can’t be declined. Depending on your situation, one might be more appropriate than the other, because there are differences in cost.
Where Can I Find Graded Life Insurance?
Not every carrier has this kind of policy. In fact, a minority of insurers do. You’ll probably need to inquire with us about your medical conditions first, as this type of policy is more of a last resort. Certain high risk policies can still be offered at more affordable rates from more mainstream companies. But if this is something which suits your needs, we can point you toward the handful of carriers who are currently offering, and we’ll get you quotes as well.
If you or someone you know is struggling to find life insurance because of diminishing health, contact us today to see if this can meet your needs, as well as your budget. Graded life insurance is an option, but remember, it’s mostly for those who have severe cases or who have already been declined by other carriers. Call us for free quotes and additional information.