Graded Death Benefit Life Insurance – What Is It

So your health has placed you in a higher risk category for life insurance?  Maybe you are assuming that the life insurance companies won’t give you the coverage you need due to a health problem? 

Don’t lose heart. 

The news isn’t all bad. You likely have options for life insurance.  Graded death benefit life insurance is designed for those who are indeed, high risk life insurance candidates.

If you are unable to qualify for traditional life insurance or simplified issue whole life insurance, many people can still qualify for a policy that has what is called a “Graded Death Benefit.”

What is Graded Benefit Life Insurance Anyway?

The key word is obviously “graded” and does what is does graded benefit really mean here?

A Graded Death Benefit Whole Life Insurance policy, frequently called graded life insurance, is a life insurance policy that has a 2-3 year tapered, initial benefit period built in before full benefits of the policy are to be reached.  Your “climbing a mountain” during that time before the full benefits are available to the beneficiary. The “grade” will vary, depending upon the graded clause written into the policy document. Know what the clause clearly states. There are a small number graded term life insurance policies which taper the benefits at the beginning and end of the “term.” However, we will not include these in this article. It is a very niche product.

A graded benefit, whole life policy has a clause written into it stating that it does not pay the full death benefit for the first couple of years of ownership due to natural death. Depending on the insurance company who offers the coverage, the clause will be either 2 or 3 years.

During the graded benefit period (2 or 3 years), the policy owner does however, have full accidental death protection. 

Any “graded” benefit period will always be written into the policy and identified in the product literature before buying.  Your independent agent should be disclosing this as well. 

Highlights of a Graded Death Benefit Life Insurance Policy

  • No medical exam
  • Less prohibitive medical questioning compared to level benefit life insurance applications
  • Fast Approval – These policies are approved based on simple criteria and result in fast issue.  Less than a couple days is common.
  • Reduced Death Benefit for Natural Death – first 2-3 years depending upon the carrier, limited payout on natural death.  This is a way the insurer negates some of the additional risk posed by your risk classification.
  • Whole Life Insurance – Permanent coverage. It is typically bought for burial and/or funeral expenses.

Obtaining Quotes For A Graded Whole Life Policy

You can pull a Graded life insurance quote by using the instant final expense quoting tool on this page. To do so, locate the “Health Class” menu and select “Decent Health” inside it. Buy doing this, you will generate several companies you may qualify for and the cost.


The recommendation is to give us a call before applying for higher risk life insurance like this.  Very often we are able to get people first day, full benefits with NO limited benefit period.

This also means a lower cost for you.

We can still get you a free, quick quote with the Final Expense quoting tool on this page. Takes about one minute to find out pricing from the top life insurance companies offering graded benefit whole life insurance. Be sure to select “Decent Health” in the tool to lock in Graded Whole Life Insurance policies from a wealth of reputable carriers.

Can I Qualify for a Graded Benefit Life Insurance Policy Though?  I’m just not sure with my health.

Ask yourself the following questions.  You must be able to honestly answer the question with a “NO” to qualify for a Graded Benefit Life Insurance policy (no sugarcoating).

  1. Do you require daily oxygen use (excluding when used with CPAP, after exercise, and for seasonal
    allergies), have an implanted defibrillator, received or been advised by a medical professional to
    receive an organ transplant or received dialysis within the last 24 months?
  2. Have you ever been diagnosed with or treated by a medical professional for Alzheimer’s disease or dementia or are currently being treated for memory loss?
  3. Within the last 24 months, have you been diagnosed by a member of the medical profession with Cancer (excluding Stage or Grade 1 Prostate Cancer, Carcinoma in Situ and Squamous Cell or Basal Cell Carcinoma) or received treatment by a member of the medical profession (excluding checkupwhile in remission, routine screening and maintenance medications) with radiation therapy chemotherapy; including oral medication or immunotherapy?
  4. Have you ever been advised by a member of the medical profession to have an amputation due to complications from diabetes?
  5. Are you currently bedridden, confined to a hospital, nursing home, mental care facility, long term care facility, hospice or have you been diagnosed by a member of the medical profession with an end-stage or terminal illness with less than 12 months to live?
  6. Have you been diagnosed by a medical professional as having the Human Immunodeficiency Virus (HIV), ARC or AIDS?

If you were able to answer “NO” to all the above questions, you qualify to apply for coverage and will likely be approved. Call us to get a graded benefit quote at 269-244-3420.

If you decide to call…

We Would Like To See If You Can Actually Qualify For Full Coverage Immediately.

This will also save you money and be the best option for protecting or leaving money for your family.

You may be very surprised to learn that a good percentage of people with tough life situations can still qualify for a full, first day whole life insurance policy, which costs less than a graded death benefit policy.  

Many people have been misled into thinking they can’t qualify for level benefit life insurance. Most commonly, because of certain medical conditions(s).

At Maple Valley Insurance Group, we’ve insured the tough cases with simplified issue and even traditional, fully underwritten life insurance policies.

Yes, even people who believed they were “high risk” and needed a graded benefit policy to be approved for life insurance.

Whether you have Diabetes type I or II, heart disease, heart attack history, stroke history, cancer history, COPD, are obese, have multiple DUI’s, epilepsy, multiple sclerosis… you probably get the picture… just about anything can be insured traditionally with the right life insurance carrier. A graded life insurance policy is needed about 10-15% of the time in our experience.

If You Answered “YES” to Any of the Above Questions

We now may have look specifically at a guaranteed issue, guaranteed acceptance life insurance policy.

There is NO advantage to owning guaranteed issue whole life insurance unless that is all you can qualify for. Please get in contact with us so we may determine if it is your only option or if we can better your situation.

With that said, if you’ve been diagnosed with terminal illness, late stage internal cancer, are on kidney dialysis, have AIDS (Not HIV) or Alzheimer’s Disease, the only type of life insurance you can qualify for is a guaranteed issue policy. These have no medical questions at all and offer lifetime coverage. 

Gerber Life is one our very competitive carriers that offers guaranteed acceptance coverage.

What if I’ve been Declined for Life Insurance multiple times?

If you’ve been declined by multiple insurance companies, more than likely have applied for term life insurance or certain carriers with stringent underwriting. It is best to speak with a someone who can sort out your overall health history/personal situation and then suggest the best carrier and product for you.

Upon submission of your life insurance application, the insurance carrier will gather electronic information from medical reporting companies. This is all done behind the scenes, electronically. These are not your actual doctor’s record, but do contains claims history and pharmacy data. The vast majority of the life insurance carriers pull this information from the MIB (Medical Information Bureau) and Milliman Intelliscript reporting (Pharmacy/Prescription reporting). This is done automatically by the insurer and is part of applying for the best and most affordable life insurance policies. Life insurance companies use this electronic info combined with the answers to the application questions to make a decision. Now days, most companies will make a decision within minutes to 2 business days.

Your prescription history matters a great deal. While a graded whole life insurance policy is more liberal… “accepting” strong prescription medications, it is best that you are prepared to discuss all of your medications with a life insurance expert. In order to really help, your prescription history is vital to your independent agent in order to make the right plan recommendation for you. Depending on your overall risk profile, it is possible that certain companies could rate you up or even decline you. On the other hand, it may be discovered that you can still qualify for full, 1st day whole life insurance. Let a pro weed out carriers that will penalize you for being prescribed certain medications.

Yes, in some rocky health cases, we do recommend making application for a graded whole life or in rather rare cases, a graded term policy, depending on your insurance goals.

This is why working with the right professional is key. Let them guide you to the right product for your unique situation.

Graded Whole Life Insurance and Conclusion

A graded life insurance policy can be a solution when harder to qualify for products are just unobtainable. 

Maybe you have been getting along for a few years in rough health but now feel the need to get some life insurance.  Graded whole life insurance exists to match the needs of the insured, yet offsets some of the risk to the life insurance company. This type of insurance WILL be more expensive then level benefit whole life insurance.

The best graded life insurance usually offers a significant portion of the full death benefit to your beneficiary even in the first year. By the second year it is paying at least 50% of the full amount. Starting in the 3rd policy year, full benefits are now available to your loved ones when your life has run it full course.

Modified whole life insurance is similar to a Graded whole life policy. However, these policies are frequently marketed with return of premium (ROP) plus interest during the first 2 or 3 years. Yes, they still require you to qualify on your overall health. Most of these… we have not found to offer value and therefore don’t recommend them.

Insurance companies often interchange words such as “graded” or “modified.” It is important be clear as to all the benefits of the life insurance policy before buying.

There is a fine line with high risk life insurance policies.  Don’t try to navigate this on your own.


Again, we urge you to speak with a independent life insurance professional.  Life insurance, particularly comparing one graded whole life policy versus another…are not apples to apples. Have an independent field underwriting agent/broker sort it out for you so you understand the limitations of the “graded” period.

Life insurance companies all look at health risks differently.  Being declined previously does not mean you must resort to a graded whole life policy either.  It may mean that you just applied to the wrong company and/or for the wrong type of life insurance to be approved.

Were here to help you sort out the best options for you. 269-244-3420 to discuss your situation. 

Feel free to leave your comments below.

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