Graded
premium whole life insurance, which is similar to term insurance, refers to a
type of insurance that have very low premiums in the beginning that will usually
increase annually until the premiums reach a level pre-determined in the policy,
usually between the ages of 70 to 80 years old. Now, for the remainder of the insured's life, the
policy will begin to build cash value and the premiums will remain level. From
the perspective of the policyholder, a graded premium whole life insurance policy can be thought
of as an annual renewable term policy that will convert to level premium whole
life insurance policy (automatically) at later ages.
