Under a Graded Premium policy, the premiums ...

In a Graded Premium policy, the structure of the premiums is designed to accommodate the financial circumstances of the policyholder during the early years of the policy. This means that the premiums are lower during the initial years, making it more affordable for individuals who may have limited financial resources upfront.

Over time, as the policyholder's financial situation may improve or as the need for coverage remains, the premiums gradually increase to higher levels. This gradual rise continues until the premiums reach a level typical of a traditional whole life policy. This approach allows policyholders to access coverage without the burden of high initial costs, thus catering to those who might otherwise find it difficult to afford such insurance.

The other options do not reflect the nature of a Graded Premium policy accurately. For instance, stating that premiums remain constant would not describe the characteristic increasing nature of the payment structure. Similarly, while premiums do eventually increase, they do not do so significantly each year on an unpredictable basis, as the increments are structured and planned. The reference to changing premiums once per year is not applicable, since Graded Premium policies inherently have a planned increase schedule, rather than allowing for arbitrary changes.