There are several different types of life insurance policies which are designed to meet the needs of individuals of all ages. You may have heard about graded premium whole life insurance that promises for a low price to guarantee coverage that holds the same premiums into your senior years. But what is GBL insurance and does it work as promised?
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What is Graded Benefit Whole Life Insurance?
It is a permanent life insurance policy as opposed to a term policy that ends after a pre-designated period. What makes this type of life insurance different from standard permanent policies is that it is graded over time so that your premiums will not increase. This means that for the first two years of the policy itself if you should pass away the beneficiary will only receive the payments from the premiums and interests, but not the stated benefits.
The way it works…
This means that for the first two years the beneficiary will not receive any more than what you paid in and the interest it has built up over that time frame. Although that may not sound like much, it should be noted that the average interest rate ranges from seven to ten percent with some companies offering up to 20% for the second year of the policy itself.
This means that the interest rate is substantially higher than what you would find at a bank which is one reason why the policy is rather attractive for some.
Please note that…
If the policyholder makes it past the initial two-year waiting period, the benefits stated in the policy will go into full force and the beneficiary will receive the amount listed on the life insurance. So, if the graded premium permanent life insurance offers $100,000 in benefits, then they will be enforced one day after the two years has passed since the policy went into effect.
What You Need to Know about Graded Premium Whole Life Policy
There are a few things that you will need to be familiar with about this type of policy. For those who are weighing the benefits and potential drawbacks, understanding the full range that this life insurance offers are paramount to deciding whether it is right for the needs of you and your family.
Although the policy may seem right for everyone, those who benefit the most are the ones who have medical conditions that will cause a deterioration over the years that will raise their life insurance rates.
It is important to understand that the medical condition is one that offers no immediate threat, but one that five, ten, or twenty years in the future might make purchasing life insurance impossible or unaffordable. Such medical conditions include, but are not limited to the following;
- Alzheimer’s Disease
- Parkinson’s Disease
- Coronary Artery Disease
- Incapacitation and More
Mostly, any condition that may not present an immediate threat, but one that will probably grow worse in the future makes you a good candidate for graded benefit life insurance.
No matter how long you own the policy, the premiums will never change. Even if you change jobs, move to another state, or if your health deteriorates. No matter how old you get, the price of the graded whole life insurance will not change which makes it highly attractive for many people who know they will not have to add or subject their payments while holding the insurance.
When you consider that many health insurance options will cost more to purchase when you get older, having one that stays at the same rate offers excellent benefits for your finances.
Another benefit of the graded insurance policy is that you are not required to take a medical exam. For those who know they have a medical condition which might raise the rates significantly, this is a bonus as you can get coverage that otherwise might be unaffordable. However, the downside is that you do pay the price for not having a medical exam in terms of higher premiums.
Read more about no medical exam life policy.
Keep in mind that
This insurance was not designed to be cheap, but rather consistent so you would not pay more as you aged. Because you represent a higher risk to graded benefit whole insurance companies, you will pay more for the insurance you receive.
Although this type of insurance can be sold to anyone, it generally caters to those who are 50 years old and older. The price for the insurance is often quoted using units which provide the policyholder with a timeline to pay the premiums before the full benefits kick in. The price of each unit will depend on the age in which the insurance is first purchased. Once you have the coverage for the price being paid, it will never go up if it is in effect.
However, the right age to purchase this type of policy ranges from 50 to 70 years old. While it is possible to purchase it when you are older, 80 years old is often the cutoff as it becomes too expensive to that point.
Why Choose This Form of Insurance?
There are good reasons why you should choose graded benefit individual whole life insurance if you fit the following qualifications.
- Over 50 years old
- Want to keep paying the same amount in premiums each month
- Expected to live for at least the next two years
- Have a medical condition that will get progressively worse over time.
It pays to get several quotes from us to see the type of rates that you will be expected to pay. By getting good quotes for GBL insurance, you can find the one that best suits your pocketbook while providing the financial protection your family will need in case the worst should happen to you. With a little persistence, you should find a company that offers the best rates so that you will have peace of mind.