What characteristic defines a Graded Premium policy?

A Graded Premium policy is defined by the characteristic that the premiums are lower during the policy's early years. This structure allows policyholders to enjoy reduced costs initially, making it more affordable at the outset. As time progresses, the premiums gradually increase, which means that the policyholder can benefit from lower initial payments while anticipating higher costs later on. This type of policy can be particularly attractive for individuals who expect their income to rise over time or those who want to manage their cash flow in the early stages of a financial commitment.

This concept is beneficial for those who may find high premiums challenging to pay initially, allowing them to secure life insurance coverage while providing a planned increase in costs that aligns with their financial growth over the years.