Graded Benefit Life Insurance

What is graded benefit life insurance?

The death benefit stated in a life insurance contract is called its “face amount.”  Graded benefit life insurance (GBL) is whole life insurance whose death benefit does not equal its face amount until two years after the policy goes into force.

If the policy pays out during the first two years, the death benefit will only amount to a refund of premiums paid, plus interest.  The interest rate will be stated in the contract and probably fall between 7 and 10 percent.

If, however, the insured dies in an accident instead of through natural causes during the first two years of coverage, the face amount will be paid in full.

Like traditional whole life insurance, the premiums do not change, and neither does the face amount.

Who buys graded benefit life insurance?

Graded benefit life insurance may be just the right product for an older customer who has dubious health but who is likely to survive at least two years.  It requires no medical exam and no health questions.

Life insurance companies are not likely to issue GBL to applicants under 50 years old.

“Per unit”

Graded benefit life insurance may be sold per unit.  In such case, a single unit corresponds to a certain amount of death benefit.  Just how much coverage a single unit provides depends on the age of the applicant at the time the policy goes into force.  Each unit may be very cheap, but a lot of units may be required to build up a significant death benefit.

If you are interested in purchasing graded benefit whole life insurance or in further life insurance information, call 1-800-823-4852 today to speak with a licensed life insurance advisor.