What is the primary characteristic of graded premium whole life insurance?

Graded premium whole life insurance is designed to offer policyholders lower initial premiums that gradually increase over a specified period, typically for the first few years of the policy. This structure allows individuals to afford insurance coverage at the outset, even if they may anticipate that their financial situation will improve in the future. Over time, the premiums rise to a level that is fixed and will remain constant for the remainder of the policy term.

This type of insurance appeals to those who expect their income to increase, making the initial lower premium more manageable. After the initial phase, the premiums stabilize, aligning with the typical characteristics of whole life insurance, which provides lifelong coverage and builds cash value.

The other options describe features that do not apply to graded premium whole life insurance. For instance, constant premiums after a few years relate to standard whole life policies rather than the graded structure. Similarly, while some life insurance products may involve variable investments tied to the stock market, graded premium whole life does not typically function in this manner. Lastly, while many whole life policies build cash value, the key defining characteristic of graded premium whole life revolves around the premium structure, not the cash value investment itself.