Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
A graded death benefit life insurance policy is designed primarily for applicants who:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Graded death benefit policies (modified benefit plans) are aimed at applicants with health impairments who cannot obtain standard coverage. The death benefit is limited (often a return of premium plus interest) during the first two or three years, and full coverage becomes payable after the grading period unless death results from an accident. This lets the insurer accept higher-risk lives.
Why the other options are wrong
- B) Graded benefit policies typically cost MORE per dollar of protection than standard policies; they are not the cheapest option.
- C) Full benefits are delayed by the grading period; immediate full payment is the opposite of how they work.
- D) Tax-deferred accumulation is a cash-value feature of permanent insurance, not the purpose of a graded benefit plan.
Memory hook
Graded = coverage that warms up: limited early, full after a few years. The price of admission for otherwise uninsurable applicants.