Graded Benefit Life Insurance Policy
Graded benefit life insurance is a type of life insurance policy that offers guaranteed benefits. These types of policies are generally offered to people who would otherwise be uninsurable. They're also offered to senior citizens as an easy way to purchase life insurance.
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Benefits
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The benefits of graded life insurance is that it is offered on a guaranteed basis. This means that you cannot be turned down for coverage and there is no health exam involved with the application process.
Warnings
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Graded benefit life insurance can be more than five times as expensive as ordinary whole life insurance. This is because there is no health exam or extensive underwriting done when issuing the policy. Because benefits are graded, you also do not receive all of your benefits immediate. Instead, your death benefit in the first few years of your policy is limited to the amount of money you've paid in premiums plus an interest factor determined by the company--generally 7 percent to 20 percent.
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Considerations
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Graded benefit life insurance is a "last resort" for life insurance. This type of life insurance is designed for individuals who do not normally qualify for insurance.
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