What Does Graded Life Insurance Mean? 
Graded life insurance means that the death benefit is graded ... `` gradually passes from one level to another '' , per the dictionary . The death benefit is not paid to the beneficiary 100 % in year one , except for accidental death . For death due to natural causes -LRB- illness -RRB- , it pays a portion of the death benefit in year one , then another portion in year two , and so on . Most policies are graded two years , but some are graded three years . Graded life insurance allows people who have a hard time getting regular life insurance to be able to get something , rather than go without . 