Life insurance is a financial product that allows you to insure your financial obligations so that, when you die, your family isn't burdened with debts they may not be able to afford. But if you don't qualify for ordinary life insurance, you'll need to know purchase high-risk life insurance -- an option when you cannot buy ordinary insurance.
Features
High-risk life insurance is also called graded-benefit life insurance. Graded-benefit life insurance is whole life insurance with a death benefit that is not payable immediately after you take out the policy. Instead, this type of life insurance provides a death benefit over time. The death benefit equals the total premiums paid, plus an interest rate factor determined by the insurance company. After a set period of years, determined by the insurer, the policy provides the full face amount of insurance that you originally purchased.
Significance
The significance of high-risk life insurance is that there is no underwriting requirement for this type of insurance. You do not have to take a health exam. The insurance company provides life insurance for individuals who have serious health issues who cannot get ordinary life insurance.
Benefit
The benefit of graded benefit life insurance is that you are able to purchase life insurance when you normally would not be able to buy it. You get guaranteed death benefits, guaranteed cash value and level premium payments over your lifetime. As long as the policy remains in force, the policy pays a benefit at your death.
Disadvantage
The disadvantage to graded whole life insurance is that the premiums are five to 10 times the cost of ordinary life insurance premiums. This means that you may not be able to buy as much life insurance as you otherwise would be able to afford, thus reducing the protection available for your beneficiaries.
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