Denied Life Insurance Coverage? Explore This Other Option
You Tried to Get Life Insurance and Got Denied
That’s a hard reality for a lot of people. Maybe your health isn’t what it used to be. Maybe you waited too long. Whatever the reason, being denied leaves you with one big question: now what?
There is an option that many people turn to in this situation. It’s called a graded premium life insurance policy. It’s not perfect. It’s not cheap. But for some, it’s the only choice left.
In a recent conversation, our CEO, Frank Biaggi, shared a real situation about this exact issue, and the only option left for that client.
Watch Frank explain a graded premium life insurance policy, how it works, and why it’s different from a standard policy.
This blog is the written version of a YouTube video by Frank Biaggi, CEO of Biaggi Life.
Why People Get Denied for Life Insurance
Life insurance companies base approval on risk. If you have serious health conditions—like kidney failure, heart disease, or are on dialysis—traditional policies often decline coverage.
Why? Because standard plans involve full underwriting, meaning detailed health questionnaires, medical records, and sometimes lab tests. If you don’t fit the insurer’s risk profile, approval is unlikely.
The Client’s Situation
Frank received a call from someone asking about life insurance for their 62-year-old father, who had serious health issues. Traditional life insurance wasn’t an option because the father would fail the health questions required for approval.
The only product available? A graded premium life insurance policy.
What Is a Graded Premium Life Insurance Policy?
A graded premium life insurance policy is designed for people who cannot qualify for traditional coverage due to serious health issues. It is usually considered a last option when nothing else is available.
Here are the basic facts about this type of policy:
- The coverage amount is usually between $10,000 and $15,000.
- The application process is simple and requires only a few health questions.
- The death benefit does not apply in full immediately; it is phased in over time.
As Frank explains in the video:
“Graded premium policies are for people with very poor health who don’t have a lot of other options.”
How Does the Payout Work?
The word “graded” refers to how the death benefit is paid out. If the insured person passes away soon after buying the policy, the payout is limited. Over time, the benefit increases until it reaches the full amount.
Here’s a common payout structure:
| Year | What the Policy Pays |
|---|---|
| Year 1 | Refund of premiums plus 4.5% interest |
| Year 2 | 25% of the death benefit |
| Year 3 | Full death benefit amount |
Example: For a $10,000 policy, if death occurs in the first year, the beneficiary gets back the premiums paid plus interest—not $10,000. By the third year, the full $10,000 is available.
How Much Does It Cost?
Graded premium life insurance is expensive compared to regular coverage. In the example Frank shared, the premium was $77 a month for $10,000 of coverage.
He makes the comparison clear:
“If that person had been healthy, the same $77 could have bought $100,000 from a good A+ company.”
That’s ten times more coverage for the same price. This happens because the insurance company is taking on much higher risk by covering someone who is already very sick.
Why Would Someone Buy This Policy?
For people in poor health, this type of policy is often the only way to get life insurance. The coverage is usually intended for final expenses, such as funeral and burial costs.
It is not designed to replace income or pay large debts because the coverage amount is too small.
What’s the Biggest Risk?
The biggest risk is losing the policy because you stop paying for it. These plans are expensive, and many people cancel them after a year or two. When that happens, all the money you’ve paid is gone, and you end up with no coverage at all.
If you decide to buy this policy, make sure you can keep it active for the long term. That is the only way it provides real value.
Making the Right Move After a Denial
Being denied life insurance isn’t the end of the road, but it does change your options. Before you decide on any policy, understand what you’re getting, what it costs, and what it actually covers. The right choice is the one you can keep for the long term without creating more financial stress.
If you want help reviewing your situation and finding a plan that fits, call us at (707) 584-3482.
Watch the full video for Frank’s complete breakdown.
Key Points to Remember
- A graded premium policy is a
last option for people who cannot qualify for standard coverage.
- Coverage is small, benefits are delayed, and the cost is high.
- If you choose this policy, commit to keeping it active so you do not lose your investment.
At Biaggi Life, we make sure your life insurance truly works for you.
With decades of experience, I’ll help you secure the right coverage.
If you want an expert to review your policy and protect your best interests, book a virtual meeting today.
