What does graded death benefits mean in an insurance policy?

Graded death benefits refer to a structure in certain life insurance policies where the death benefit begins below the face value of the policy and gradually increases over a specified period until it reaches the full face amount. This gradual increase can help accommodate individuals who may be at a higher risk of mortality when first applying for coverage, making it easier for them to obtain a policy.

As the policyholder continues to hold the policy, the benefits increase, reflecting a reduced risk to the insurer over time. This type of benefit is commonly found in guaranteed issue or simplified issue policies, where applicants do not have to undergo extensive medical underwriting.

The other options do not accurately capture the nature of graded death benefits. Fixed coverage at 100% does not incorporate the gradual increase aspect. Restrictions on benefits based on time or partial payouts do not align with the essential concept of graded benefits, which is inherently about the gradual growth of coverage until the full benefit is accessible.