Health is one of the most important factors that insurance companies take into account when we go to purchase a policy; ,they ask for a medical exam almost every time, and our medical history is not neglected in the process. If you have preexisting medical conditions, if there have been cases of hereditary diseases in your family or if you are older, getting a life insurance won’t be very simple. However, in order to serve those in poor health as well, insurance companies have come up with a system that protects both them and the customers: graded life insurance.
Graded life insurance can be a good option for those who live with an incurable illness which might kill them sooner than normal, or those who have risky occupations and could die at any moment. The trick with this type of life insurance is that its cash value grows as the years pass; if the policyholder dies in the first year of insurance, then the beneficiary will receive only a small percentage of the policy’s cash value; if this occurs in the second year, the percentage will be slightly bigger, and so on. The longer you live, the bigger the benefits will be for those left behind when you die.
Before getting graded life insurance, do some research in your area and check out the life insurance quotes that each company offers for a policy like this. The more complex matters are when getting insurance policies, the bigger the premiums are as well; thus, it is safe to say that premiums for graded life insurance are generally bigger than those for normal policies. The company takes a certain risk in insuring you, and if you die in the first couple of years of insurance then they lose a customer and there’s no one left to pay premiums.
You have to think carefully when considering graded life insurance, because it may not be the most advantageous for you either; the premiums are large and level, but the death benefit is not. If you die too soon your family could receive a sum so small that it wouldn’t protect them. This type of policy is thus recommendable only to those who can’t get life insurance otherwise, and in that respect it is similar to the guaranteed issue life insurance, where you are not obliged to take medical exams and disclose personal health information.
Finally, it is important to know that if you surrender your graded life insurance policy, you only receive the cash value you managed to gain so far, but no death benefit will be included.