Graded Premium Life Insurance: A Solution When Other Policies Say No

When you're no longer in perfect health, do you still have life insurance options?

The good news is, yes, and it's called graded premium life insurance.

The not-so-good news? It is more expensive. But in many cases, the benefits still outweigh the cost.

If you or a loved one has been turned down for traditional life insurance due to health issues like kidney failure or other serious conditions, there's still hope.

In the real-life example below, we'll show you what a graded premium life insurance policy is, and why it may be the right choice when other options aren't available.

This blog is the written version of a YouTube video by Frank Biaggi, CEO of Biaggi Life.

What is a Graded Premium Policy?

Graded premium life insurance is a type of policy where you can qualify with just limited health questions answered. 

There is no full medical exam required, it's for people with serious health conditions who would likely be denied.

If you're on dialysis for kidney failure, you have a higher probability to get approved with this policy, compared to traditional life insurance.

In this case we reviewed, the client was a 62-year-old, the premium was $77 per month for a $10,000 policy.

This particular company offers up to $15,000 in coverage.

The client chose $10,000, likely to help cover final expenses when their father ultimately passes.

Policy Comparison – Graded vs. Traditional

The first thing I did was compare this policy to a normal life insurance plan that you'd purchase if you were healthy.

And if you're healthy, you would want to get one of the best policies on the market.

These are from A+ top rated companies that have really competitive life insurance.

So, now let's compare these with a graded premium policy with $77 a month for $10,000 for a male, age 62.

Findings

The downside with this policy, is it's 10 times more expensive.

If this insured was healthy, that same $77 a month, he could purchase a $100,000 permanent policy from a good A+ company. One hundred thousand dollars.

But because he is no longer in good health, that $77 a month only gets him $10,000 of coverage.

And here’s how the graded benefit works:

• Year 1: If the insured passes away, the policy only returns the premiums paid, plus 4.5% interest.
  
• Year 2: It pays 25% of the death benefit—$2,500 instead of $10,000.
  
• Year 3 onward: The full $10,000 benefit is available.

By contrast, if he would have been healthy, his premium gets him $100,000 coverage from day one until the last day of his life.

On the one I ran, I ran a minimum premium. Down the road, he would have to bump his payment up to keep in force. But the initial $77 keeps it level for the first 10 years. After that, you can bump them up gradually.

If you’re considering one, it’s important to fully understand:

• The higher cost
• The graded death benefit
• And that it’s limited at first



It’s Important to Keep Your Policy Active

My advice to somebody who purchases a policy like that is, do not let it lapse.

Keep paying the premiums.

Because one of the big problems that happen is, they only pay it for a year or two, then they lapse it.

It's expensive, you don't get a lot back in death benefit.

And you go, why is that? A lot of reasons. I'm not going to get into it, but that's what they do.

But if you get a policy and you review it with an agent that's going to work with you on that policy each year, and let you know what's going on, then you don't lapse it.



Conclusion

There is a danger of not understanding how the death benefit is different. It doesn't pay upfront, it's expensive, and you need to be aware of the limitations.

As long as you understand the limitations of the policy, the added expense, it can be a very good value for you.

If you haven't reviewed your life insurance policy recently, now is the time.

Even a small change could lead to a much stronger financial future.

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.