What Exactly Is A Graded Benefit Whole Life Insurance? 
Graded benefit whole life insurance pays out a reduced death benefit during the first 1-3 years that you have the life insurance policy , for death due to illness or old age . Sometimes the death benefit starts out very low in year one , then goes up a bit in year two , and so on until the policy pays 100 % . Thus , the title , `` graded '' . Most graded life insurance policies will pay out 100 % from day one for accidental death . Graded life insurance pays back more than you paid in during the first graded years of the policy , and more than you would be able to get from a savings account . So certainly has its place for those who are unable to get a policy that pays 100 % from day one for death by any reason . 