Graded benefit life insurance plans provide the insured with life insurance protection, but the amount of life insurance paid out upon the death of the insured is limited the first 2 or 3 years, usually.
Basically, it means that you do not have full death benefits until being insured by the policy for at least 2 or 3 years.
For instance, if the insured dies within two years of buying the life insurance, the amount of the pay out to the beneficiary would not be the face amount death benefit from the policy, but a smaller amount, either a percentage of the death benefit, or the total premiums paid plus interest.
A graded benefit life insurance plan helps the insurer by limiting their risk the first couple years you are insured, and providing some coverage for the insured person who may not have other options available for the purchase of life insurance.
Learn more about graded death benefit life insurance plans and how they work.