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What is graded benefit whole life insurance?

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When it comes to most life insurance policies, you can expect a fairly straightforward death benefit payout. However, when it comes to a graded benefit whole life policy, your beneficiaries will not get the full death benefit from your policy if you pass away within the first few years of purchasing life insurance.

Certain people need life insurance but can’t purchase a standard policy for various reasons. These individuals might benefit from a graded benefit whole life policy.

If you are searching for a life insurance policy, it’s good to shop around to compare rates and see if you can save on monthly or annual rates. Using an online quote tool can help you find and compare life insurance rates from multiple companies in your area at the same time.

What is graded benefit whole life insurance?

In terms of whole life insurance, graded benefits are death benefits that only pay out a portion of their value during the first few years of the policy’s life.

If you maintain your policy and are alive after the first three to five years of your graded life insurance policy, the graded portion of your death benefit disappears. Your beneficiaries will then receive the full death benefit when you pass away.

Under a graded premium whole life policy, policyholders do not pay a lower premium for the graded death benefit. Though the policy’s death benefit stands to fluctuate, the monthly rates of the policy do not change.

Who should buy graded benefit whole life insurance?

Not everyone benefits from a graded benefit life insurance policy, but there are a few instances where purchasing a graded benefit policy might make sense, including:

  • If you have a health condition or other reason why you were turned down for a life insurance policy
  • If you are 50 years old or older
  • If you want to pay the same monthly rate throughout the policy
  • If you have a life expectancy of at least two to five years
  • If you have a medical condition that is likely to worsen over time

Most graded benefit life insurance policies do not require a medical exam, making them a good option for individuals with health conditions as they won’t get turned down due to health.

People who wait until their 50s or 60s to purchase a life insurance policy may also benefit from a graded benefit policy, though they will likely incur higher rates than other policies.

What are the downfalls of a graded benefit whole life insurance policy?

The two major downfalls of a graded benefit life insurance policy are cost and the way the death benefit functions for the policy’s first few years.

You are likely to pay a higher-than-average rate for graded benefit coverage, though it will stay the same throughout your life.

Still, many other life insurance policies boast lower monthly rates that may work better for your life and budget. If that’s the case, a graded death benefit policy may not be for you.

Similarly, a graded benefit policy may not be a great option for you because of the death benefit. Each policy is different in terms of how long the death benefit is graded, but you can expect the death benefit of your graded life insurance policy to last at least two years.

When the graded policy is in effect, your beneficiaries will only receive the premium payments you made on the policy plus a small portion — typically eight to 10% — of the death benefit.

How much is graded benefit whole life insurance?

Rates for a graded benefit whole life insurance policy vary based on gender, age, and death benefit amount.

The table below shows average rates for a whole life policy based on age and death benefit amount.

Average Monthly Life Insurance Rates with Top Insurance Companies
Age & Gender
Foresters Financial
– $250,000 Policy
State Farm
– $250,000 Policy
Foresters Financial
– $500,000 Policy
State Farm
– $500,000 Policy
25-Year-Old Female$156.80$203.14$304.24$400.19
25-Year-Old Male$178.68$225.12$347.99$444.14
30-Year-Old Female$188.96$234.24$368.11$462.39
30-Year-Old Male$216.52$260.14$422.80$514.19
35-Year-Old Female$230.52$273.19$450.36$540.29
35-Year-Old Male$267.05$311.47$522.55$616.84
40-Year-Old Female$277.99$321.24$543.99$636.39
40-Year-Old Male$326.33$375.62$639.80$745.14
45-Year-Old Female$349.30$381.29$685.30$756.49
45-Year-Old Male$401.58$467.84$788.99$929.59
50-Year-Old Female$429.14$470.02$843.68$933.94
50-Year-Old Male$499.36$578.12$982.80$1,150.14
55-Year-Old Female$549.89$598.79$1,082.55 $1,191.49
55-Year-Old Male$629.30$727.97$1,239.61 $1,449.84
60-Year-Old Female$700.83$769.94$1,381.36 $1,533.79
60-Year-Old Male$802.33$988.97$1,582.18 $1,971.84
65-Year-Old Female$912.58$1,045.09 $1,800.93 $2,084.09
65-Year-Old Male$1,043.61 $1,310.87 $2,060.36 $2,615.64
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You can expect guaranteed issue rates for whole life insurance to be more expensive than those listed above; this is especially true as you get older.

What can I get instead of a graded benefit policy?

Suppose you need something other than a standard whole or term life insurance policy and don’t want a policy with graded benefit. In that case, you can consider purchasing something like a guaranteed issue life insurance policy.

Guaranteed issue policies are similar to graded benefit policies. They are a good option for individuals with health or medical conditions that could make them ineligible for other forms of life insurance.

However, guaranteed issue policies often come with lower death benefits, potentially equating to lower monthly rates for life insurance coverage. Additionally, guaranteed issue policies do not wait to pay out the entire death benefit.

Should I buy life insurance?

There are a variety of options when it comes to whole life insurance for adults. Your best bet is to shop around online and compare quotes from multiple companies at once.

Comparing life insurance quotes can ensure you purchase the right policy at an affordable price.


Ashley Dannelly

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