Graded Benefit Whole Life Insurance [3 Buyer Beware Secrets]

Graded benefit is a policy of last resort. Why?…because you’re buying a policy that has a waiting period. These graded death policies come in 2 different forms:

  1. Simplified Issue
  2. Guaranteed Issue

With a Simplified Issue Graded Benefit policy, you must answer medical questions to qualify for it. They’re called “Simplified Issue” because the application only asks a few knockout questions to qualify. 

Simplified Issue vs Guaranteed Issue?

Here is a quick rundown on the pros and cons of graded benefit Simplified Issue and Guaranteed Issue.

Pros

  • Simplified Issue has higher face amounts -some companies offer over $100,000 benefit (this is much higher compared to Guaranteed Issue) 
  • Guaranteed Issue does not have any health questions
  • You can’t be declined due to health with Guaranteed Issue

Cons

  • Guaranteed Issue has smaller face amounts (Maximum of $25,000)
  • Guaranteed Issue is the most expensive
  • Both Simplified and Guaranteed Issue have graded benefit waiting periods of 2-3 years
  • You need to pass the health questions with Simplified Issue

What if I can’t pass the health questions?

That’s where a Guaranteed Issue graded benefit comes in. When you first speak to your independent agent, they will find out if there are any companies that you can qualify for in order to save you money (and get covered immediately).

If you can’t qualify for Simplified Issue, then a Guaranteed Issue graded benefit policy is your only opportunity for coverage.

Graded Benefit Health Risks

What kinds of health risks or knock out questions would make a graded benefit policy your only option?

There are some common situations where you would need to buy a Guaranteed Issue policy. Each company may have different health questions on their application, but the following questions are fairly common. 

Can you answer “No” to all the questions below?

  • Has you been diagnosed or received treatment for: Human Immunodeficiency Virus (HIV), Acquired Immune Deficiency Syndrome (AIDS), or AIDS Related Complex (Arc)?
  • Have you been diagnosed with a terminal illness?
  • Do you have a disability that where a wheelchair is required?
  • Are you confined to a nursing home or other facility?
  • Have you received a diagnosis of heart disease, kidney disease, cancer, diabetes or another serious illness in the last 24 months?
  • Have you had a stroke?
  • Do you have Alzheimers any other cognitive impairments?

If you answered “Yes” to any of the questions above, a graded benefit individual policy may be your only opportunity for coverage.

graded benefit life insurance companies

graded benefit life insurance companies

I stress the word “may” because some companies have different health questions. Some insurers ask more questions than others. It isn’t like every company has the same questions on their applications.

With that said, if you are unable to qualify for traditional coverage, here are our recommendations…

Top 3 Graded Benefit Life Insurance Companies

These graded benefit companies typically show up with the best rates when we run quotes for our clients. Here are the best guaranteed issue companies available:

  1. AIG
  2. Mutual of Omaha
  3. Gerber

Each of these companies are rated “A” or higher from A.M. Best. This shows that they are financially strong and have excellent reputations. If you’d like to learn more about these companies check our reviews on AIG, Mutual of Omaha and Gerber. Once again, these are only a few of the companies available. Your agent should be asking your the health questions like the ones above to see exactly what type of policy and which company can give you the best deal.

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