Graded premium life
Cash Value Policies: Graded Premium Life
Description Premiums Cash Value Advantages Disadvantages Uses
Guaranteed at-death proceeds; Guaranteed lifetime benefits Starts low, increases over time ultimate rate will be higher than comparable Ordinary Life policy Guaranteed build-up (less in early years than Ordinary Life); Participating policies may have build-up beyond amounts guaranteed Forced savings element; Low initial premiums (compared with Ordinary Life); Guaranteed cash values; Income tax advantages Rates higher than term Cash values build up slower than Ordinary Life; Investment return usually marginal Younger buyers with high needs, low current income (but prospect for future income increases)