It means the full amount is not paid if you die of natural causes in the first 2 years. Your family gets back the premiums you paid, often plus a little more, instead.
This is called a graded death benefit. Policygenius says the waiting period is two years in most cases.
Here is an example from Policygenius. You have a $25,000 policy and pay $100 a month. You die after one year. Your family may get $1,200, or $1,320 if the policy pays back 110 percent.
Accidents are often different. Policygenius says if you die from an accident, even in the first two years, the policy may pay the full amount.
After two years, your family can claim the full amount. These plans are common in guaranteed issue and final expense insurance. They usually pay up to about $25,000.
Try for a policy with no wait first. Policygenius says to see if you qualify for one without a graded benefit. Washington says funeral policies can cost more than the funeral itself over time.
More questions
Does the wait apply to accidents?
Often not. Many policies pay the full amount for an accidental death from day one. Check your policy.
Is this the same as the contestable period?
No. The contestable period is when the insurer can check your application. Texas says it lasts two years for most policies.
Words to know
- Final expense
- A small policy, also called a burial policy, that covers or prepays funeral costs.
- Graded death benefit
- A policy that pays less than the full face amount in the early years. The payout grows over time.
- Guaranteed issue
- A policy for people with health issues who may not qualify for other coverage. Very few people are turned down.
- Premium
- The amount you pay an insurance company for your policy.
