Life Insurance - What is the difference between guaranteed issue and graded benefits?

What is the difference between guaranteed issue life insurance and graded benefits life insurance plans?

Guaranteed acceptance life insurance offers you a limited amount of life insurance protection without any health exam. Basically, if you are within a certain age range, you may be guaranteed approval for a life insurance policy.

A graded benefits life insurance plan provides a small amount of life insurance that is fully available after you own the policy for 1-2 years, depending on the specific life insurance plan. If you were to pass away before the first 1-2 years, your beneficiary would receive less than the full amount of life insurance.

A guaranteed acceptance life insurance policy will usually provide graded benefits for the first 1-2 years you own the plan.

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What is Graded Death Benefit Life Insurance?

Graded Death Benefit refers to the death benefit your beneficiary receives if you die while your life insurance policy is in force.

Graded death benefit is a death benefit that increases with the age of the insured person.

Graded death benefits may increase gradually then level off, or may increase sharply before becoming level.

This type of coverage may be common in juvenile life insurance and senior life insurance.

For instance, a 75 year old person buys a $10,000 graded benefit life insurance policy. The full $10,000 death benefit will not be paid until the person lives for 20 years. If the insured person dies within the first year of the policy, the beneficiary receives only 50%, or $5,000 of the death benefit.

However, there are other life insurance policies, such as, Globe Life Insurance which offer full coverage from the start of the policy for people age 78 and under. And, there's no medical exam required.

NEW! Here’s How to Buy up to $500,000 of Term Life
Insurance without any Medical Exam,
Just a Few Health Questions.