Graded life insurance pays out a full death benefit upon the death of the insured person if the person dies after being insured for 2-3 years, it varies depending on the life insurance policy.
Graded life insurance policies generally pay 100% of the death benefit from day one for accidental death.
For death due to natural causes including illness, some pay only what you paid in as premiums, plus a small percentage more during the first 2 or 3 years. Others may pay a percentage of the death benefit and may only have a two year graded death benefit period. After the graded period, you have full coverage for death resulting from natural causes.
Learn more about how a graded benefit life insurance policy works.