what is a graded premium life insurance policy

This contrasts with traditional or level life insurance policies, where premiums are locked in and stay the same over time.

Although the difference may not seem significant, it can impact your finances. While you may not see much cash value growth in two years, a more extended introductory period could cause you to lose some. You'll also be paying five to fifteen times more for similar coverage under a term policy than you would without a crucial policy feature.

As a short recap, there are partial coverage plans that payout a portion of the death benefit during the first two years and there are plans that will pay out 100% of the benefit right away.

In reality, these are all marketing terms meaning the same thing. They are referring to a whole life insurance plan with limited underwriting. This means that even people with severe health problems can still be eligible.

For example, ABC insurance company excels at ensuring people with diabetes and offers them rock bottom rates. Their underwriting is set up to work that way.

Modified whole life insurance offers lower premiums for a short time (usually two to three years but occasionally up to five or 10), followed by a higher rate for the remainder of the Policy. The initial savings may be tempting, but it's not the best life insurance policy for most people because of the high premiums and complicated policy options.

Still paying more for your coverage than you would for term insurance

Some companies offer a two-year waiting period for modified premium whole lives, while others require you to wait three years.

While the death benefit protection remains the same, the premiums don't change.