A 'graded death benefit' final-expense whole life policy issued without underwriting (guaranteed-issue) to a 70-year-old smoker typically:

Explanation

A 'graded' (or 'modified') death benefit final-expense policy is designed for older or impaired applicants who cannot qualify for standard underwriting. To control adverse selection without medical underwriting, the contract typically pays only a return of premiums plus modest interest (e.g., 10%) if the insured dies from natural causes during the first 2 or 3 policy years; from year 3 (or 4) onward, the full face amount is payable. ACCIDENTAL death is usually covered in full from day one. Paying the full face amount from day one for any cause of death describes a standard, fully underwritten whole life policy, not a guaranteed-issue contract. Paying no death benefit at all for the first 5 years and returning nothing overstates the limitation — death is covered during the graded period, just at a reduced amount. And doubling the face amount for survival to age 100 fabricates an endowment-style bonus these contracts do not carry. Final-expense graded-benefit products are common in the senior market and must be clearly disclosed under California suitability and senior-protection rules.