What is the main purpose of graded premiums in life insurance?

Graded premiums in life insurance serve the main purpose of accommodating initial financial hardship by offering lower starting costs. This structure allows policyholders to gradually increase their premium payments over time. The lower initial rates can make it more affordable for individuals who may be facing financial constraints when they first purchase the policy. As their financial situation improves, they can then transition to higher premium payments, allowing them to maintain coverage without the immediate burden of higher costs.

This option highlights a key design feature of graded premium policies: providing financial flexibility during the early years of coverage, which can be particularly beneficial for young families or individuals just starting their careers. By starting low and gradually increasing, graded premiums can align better with the income growth many people experience over time.