What Is a Graded Death Benefit?
An important detail to understand before you buy.
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Quick Answer
A graded death benefit is a limited payout period — usually the first one to two years of a policy — during which a death from natural causes pays out a return of premiums paid plus interest rather than the full face amount.
It also helps to understand burial insurance waiting periods before you decide.
Graded death benefits are common on guaranteed issue policies because the insurer accepts every applicant regardless of health, and needs a way to manage risk on people who may already be seriously ill at the time they apply. After the graded period ends, the policy pays the full death benefit for any covered cause of death.
Importantly, death caused by an accident is typically covered at the full benefit amount from day one, even during the graded period. Simplified issue policies, which do ask health questions, often skip the graded period entirely and pay full benefits immediately upon approval.
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