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. Option A describes a standard (fully underwritten) whole life policy. Option C overstates the limitation (death is covered, just at reduced amount). Option D fabricates an endowment-style bonus. Final-expense graded-benefit products are common in the senior market and must be clearly disclosed under California suitability and senior-protection rules.