In which type of policy are premiums lower during the early years?

A graded premium policy is designed to have lower premiums during the early years of the policy. This structure allows policyholders to benefit from initially affordable payments, which can be an attractive option for individuals who may have budget constraints in the beginning. Over time, the premiums increase, helping the insurer manage the cost of coverage as the insured ages and the risk of claims rises.

In contrast, universal life insurance features flexible premiums that can vary over time but do not inherently include a structured lower premium period. Variable whole life insurance involves investment components with premiums that remain consistent and reflect the investment performance, rather than starting lower. Term life insurance typically maintains a fixed premium throughout the term of coverage, making it quite different from the graded premium structure. Understanding these nuances helps clarify why the graded premium policy uniquely offers lower initial payments, appealing to those looking to balance cost with life insurance protection.