Million Dollar Life Insurance Policy
A 1 million dollar life insurance policy might sound like too much coverage at first, but once you start to break down the figures, you might see a million dollars wouldn’t even be enough.
A million dollar life insurance policy may seem excessive, but when you consider your family’s needs over the next decade, a million dollars may not provide enough coverage.
That’s why getting a million dollars or more in term life coverage has become so normal. If you need this much coverage, you should be able to buy it.
And you may be surprised how affordable the coverage can be, especially if you’re young and healthy.
What Is A Million Dollar Life Insurance Policy?
A million dollar life insurance policy creates a contract between you and your insurer: In exchange for paying regular premium payments, your insurer promises to pay your loved ones a million dollars if you die.
Your million dollar death benefit would be paid as a tax-free sum to your beneficiary. You’d choose your beneficiary when you bought the policy. Most people choose their spouse, a parent, or a grown-up child to serve as their beneficiary.
The cost of life insurance — whether it’s for a million dollars or just $25,000 in coverage — depends on your life expectancy and other details about your policy. Whether you bought a 20-year term life insurance policy or some kind of permanent coverage would make a huge price difference.
We’ll explore these details below since they will help determine how much you would pay for a million dollars in life insurance coverage.
How Does A Million Dollar Life Insurance Policy Work?
Life insurance policies work the same regardless of their size. Higher value policies just require higher premiums.
Life insurance policies of any size can be complex and confusing, so let’s break down some of the basics:
What Does Life Insurance Cover?
Your life insurance coverage could replace your income, pay your funeral expenses, and cover any unpaid bills you might leave if you died unexpectedly. Private student loans, credit card bills, the mortgage — life insurance can pay off these bills rather than leaving the burden for your family.
You may expect your health insurance to cover medical expenses even after you died, but health care policies pay only a portion of your bill, and your family would still be responsible for the rest.
Besides medical bills, your policy can also cover funeral or other end-of-life costs. These expenses will vary depending on where you live and your family’s customs (some traditions require added cost).
On average, funerals cost about $10,000, but some exceed $20,000. Again, a life insurance payout could prevent your family from having to come up with this money.
You might be thinking your income doesn’t come close to one million dollars so why would you need a million-dollar life insurance policy?
To answer this question, consider how much money you would need to replace your income for 10 years, as many financial experts advise.
If you earn $100,000 a year, 10 years of income would put you right at $1 million. And this is just a basic guideline when you’re buying a term life policy. The specifics of your life could require even more coverage.
For example, will your children attend a private college? You might need even more coverage. The same could be true if your future dreams include buying a vacation home or renovating your home.
Business owners may also have additional debts or financial obligations to consider. Likewise, policyholders who care for their elderly parents may also want more coverage.
Here’s another factor to consider: interest rates. If you died and your family claimed your policy’s death benefit, they could decide to invest the money rather than spend it.
If you had $1 million in life insurance coverage — and if your family invested it and earned a 5 percent return — they could generate $50,000 a year on the investment.
Of course, during times of low-interest rates, you’d need more life insurance coverage to generate the same $50,000 in interest income off the life insurance payout.
How Much Does A Million Dollar Life Insurance Policy Cost?
Only the underwriting process will generate the actual cost of your policy.
But here are some ballpark numbers to give you an idea:
|Age||Gender||30 Yr Term||20 Yr Term||10 Yr Term||Guaranteed Universal|
Keep in mind these costs would be much higher for smokers or anybody with a pre-existing health condition. As you can see, term life insurance provides, by far, the best value.
Calculator: Your Instant Quote
This tool will give a significantly more accurate view of how much a million-dollar policy might cost you compared to the general samples.
You’ll get an estimated quote without submitting any information. Then, when you’re ready, complete your no-obligation application to get your final quote before purchasing.
Do I Need a 1 Million Dollar Life Insurance Policy?
Here’s some good news: increasing the face amount of coverage doesn’t increase your monthly premium as much as you might expect.
So how do you find the right coverage amount?
A good rule of thumb is to buy 10 to 20 times your income in life insurance coverage, but your exact coverage should be customized to fit your situation.
Customizing Your Coverage
Your exact coverage should consider your earnings, plus:
- Your number of dependents.
- Your dependents’ future education plans.
- Any additional financial obligations, such as business debt.
- Your end-of-life or final expenses (typically $7,000 to $10,000).
- Your family’s ongoing living expenses.
- Your future dreams: Home ownership, a vacation home, charitable giving, etc.
After doing the math, you may discover you don’t need a million-dollar policy after all. If you’re a lower earner or you don’t have any children, $500,000 or less in coverage may be just fine.
Who Needs $1 Million in Life Insurance Coverage?
On the other extreme, if you:
- Are a high-earning breadwinner with an expensive lifestyle to maintain.
- Would like to leave a large inheritance.
- Face an estate tax and need high liquidity.
- Are a partner in a small business…
…you may quickly discover you need a $5 million dollar term life insurance policy – or even more.
Million Dollar Life Insurance as Philanthropy
Some people with philanthropic hearts like to name a charity as the beneficiary of their life insurance policies.
Giving life insurance can net larger donations, and your estate could get a tax break — and the charity might get some extra publicity. Your loved ones could reserve part of your million dollar term policy for charity.
Or you could get a smaller whole life insurance policy whose accumulated cash value could fund a charitable contribution.
What Affects The Cost of a Million Life Insurance Policy?
Numerous factors affect life insurance premiums whether you’re buying a million dollars or just $25,000 in coverage. These factors affect your life insurance policy cost:
- Age:Younger shoppers can access the lowest rates.
- Health Status: Healthier applicants can pay less, especially when they take a health exam to document their vital signs and lab results. Many health classes would never qualify for a $1 million or $2 million dollar term policy.
- Policy Term Length: Longer terms mean higher premiums. A 30-year term would dwarf the cost of a 10-year term. Your coverage would expire at the end of your term.
- Policy Type: As I said above, term policies cost significantly less than permanent policies.
- Policy Size: More coverage costs more in premiums.
- Occupation: Dangerous jobs put you at higher risk of an early death, and your insurance underwriters will respond to this risk by charging higher life insurance rates.
- Hobbies & Habits: As with your profession, your hobbies and habits can also increase premiums when they’re more dangerous. Smokers, for example, will pay a lot more.
Let’s look deeper at these issues to learn how you can save on million dollars or more of life insurance.
Age and Health
Older people pay more when they get new life insurance coverage. Why? It’s basic statistics: Older people are more likely to die sooner, and life insurers base premiums on their likelihood of paying your policy’s claim.
Health is another important factor for the same reason. Applicants with diabetes, COPD, high blood pressure, or other potentially life-shortening conditions will pay higher premiums because they’re more likely to cost the insurer a claim. In fact, large policies could be off limits for shoppers in these health classes.
For million dollar policies, age is even more important because it affects the multipliers life insurance companies use to determine your eligibility.
Anyone younger than 40 can usually buy coverage worth 30 times their annual income; applicants older than 60 can buy coverage worth only 15 times their income.
This massive difference can directly impact your ability to qualify for $1 million or more in coverage.
Policy Term, Amount of Coverage, and Type
The nature of your policy will also affect your cost
Shorter terms mean lower costs because once again, your insurer takes less risk of a payout.
More coverage costs more too, naturally. A policy with $1 million in coverage will cost more than the same kind of policy with only $100,000 in coverage.
However, the million dollar policy won’t cost 10 times more even though it’s 10 times larger. This can help justify buying a larger policy: You’d get more coverage for your money.
And, as I said above, your policy type will make a huge difference. Finding the best term life insurance policy for you makes it more affordable for most people, especially younger and healthier applicants. Older applicants often need types of life insurance that do not offer a million dollars or more in coverage.
As you can already tell, insurers worry a lot about risk. There’s an entire profession — insurance underwriting — dedicated to assessing the risk your policy would present.
When you apply for coverage, your occupation will help underwriters assess the risk your coverage would present.
Roofers, deep sea anglers, aircraft test pilots — these kinds of jobs will likely increase your premiums because statistics show higher rates of on-the-job fatalities.
This shouldn’t be too surprising. But here’s one that might be more unexpected: Traveling salespeople typically pay higher premiums. Why? Because traveling so much increases the likelihood of being in a fatal car crash.
Underwriters from the best companies spend a lot of time researching these kinds of questions so they can charge appropriately for your coverage and keep other policyholders from subsidizing your risk.
Hobbies and Habits
Your hobbies and habits will be relevant too. The insurance company probably won’t care if you knit scarves in your free time or go play snooker every weekend. But if you’re a horse rider or SCUBA diver, your insurer might reconsider your rates.
If at all possible, quit smoking before you buy life insurance. Non-smokers pay a fraction of the average cost smokers pay.
Some companies offer a lower rate for anyone who begins a smoking cessation program.
Best Million Dollar Life Insurance Companies
So you know how much coverage to buy, and you have a pretty good idea of how much you’ll pay in premiums.
The next decision may seem even tougher: Which company should provide your million dollar policy?
With hundreds of life insurers competing for your business — and using their industry-specific jargon to confuse you — it’s normal to feel a little overwhelmed.
Here are some of the best providers of million dollar life insurance. I’d recommend getting life insurance quotes from any or all of these providers:
Haven Life: Best Overall
For fast and easy coverage, Haven Life is perfect.
You can complete the entire process online – you don’t even need a medical exam if you’re 45 or younger and have a clean health history.
Haven Life sells policies from MassMutual, one of the most established insurers in the market. So you’re getting the best of both worlds: traditional stability in a digital environment.
Haven has earned several accolades, including a top score on the Humans Rights Campaign Corporate Equality Index and the best rating for financial strength and claims-paying ability.
Rates start at less than $20 a month for million-dollar policies. You can apply for life insurance coverage up to $3 million.
To determine your eligibility, Haven Life underwriters will consider your income, the cost of health care for a non-working partner, your debts, the cost of children’s education, Social Security, child care, and funeral expenses.
To be eligible, you’ll need to be:
- A U.S. Resident
- Between 18 and 64 years old
- Not in the military
You can’t use the policy to replace a previous policy or for a business, and Haven offers only individual term life insurance – no group life or permanent life options.
Banner Life: Best for Smokers
Banner Life is an offshoot of Legal & General Group, a multinational insurance company. Banner uses different life insurance agents to sell its products. Men tend to spend a lot more money on life insurance than women, so Banner caters its coverage specifically towards men.
Unlike Haven Life, Banner lets you choose between term insurance (which lasts for a set number of years) and universal life insurance (which can last permanently). Banner also offers numerous riders, including coverage of children and the ability to access your death benefit before you die.
Your application can be approved over the phone with no medical exam or doctor’s records if you meet specific criteria.
Banner Life shines is in its treatment of most health conditions. For example, smokers who quit after buying coverage could still requalify for lower rates several years into their coverage. Most other companies lock in a premium based on your current tobacco status.
Banner Life does not sell policies in New York but shoppers can find very similar coverage with William Penn Life Insurance, another subsidiary of Legal & General.
MetLife: Best for Permanent Life Options
You’ve heard of MetLife.
This huge multinational insurer offers both term life insurance and various permanent life insurance options, including universal life insurance.
There’s also a survivorship life insurance policy, which covers more than one life. Whatever you’re looking for, MetLife probably has it.
Chances are MetLife will be selling personal policies through Brighthouse, its subsidiary.
AIG: Best for Diabetics
AIG, another big name in the business, also has a full stable of products, from term to whole to universal life.
Rates start from just $14 a month for a $250,000 term life insurance plan, although, you’d need to be young and in excellent health to get such a low payment.
AIG is particularly well suited for anybody who has recently lost weight or been diagnosed with diabetes, but less than ideal if you have high cholesterol or a family history of heart disease or cancer.
PolicyGenius: Best for Price Comparisons
Comparison shoppers will like PolicyGenius, especially if you’re not in perfect health.
Just to be clear: PolicyGenius does not provide insurance directly. Instead, the service helps you compare quotes from most of the big-name insurance companies online, making it fast and efficient to find your best rate.
PolicyGenius has great educational content, too. You can learn about the terminology used to describe insurance policies, and there’s also an Insurance Checkup tool to check whether you have the right insurance and coverage for your needs.
Prudential: Best for Multi-Million Dollar Policies
Prudential Financial offers term policies with $10 million or more in coverage. You’d need to prove why you need so much coverage. But if you need this much life insurance, you can buy it from a company like Prudential.
To buy this coverage you’d need to work with a financial advisor who is licensed to sell Prudential policies.
Am I Eligible For A Million Dollar Life Insurance Policy?
Insurance companies use a simple formula of combining your age and income to determine your eligibility.
Typically, underwriters multiply your annual salary anywhere between 10 to 20 times to figure out how much life insurance coverage is truly needed. If you make around $50,000 a year, a 1 million dollar policy could be just what you need.
After checking out your income, your age is also analyzed. The general rule of thumb is–the younger you are, the higher the coverage and cheaper the rates.
As long as you have a job and are in good health, don’t sweat getting the protection you need.
How Big a Life Insurance Policy Should I Take Out?
If you’re still unsure exactly how big a policy you need, you could check the life insurance needs calculator on Quotacy. Just enter some basic information about your assets, obligations, and future needs and Quotacy will suggest a coverage amount.
These tools can be a lot of fun to play with, and they’re a great resource. Just remember the calculator doesn’t include the cost of college tuition.
If you find you need a million dollars or more in life insurance coverage, you should be able to find it. If you’re a non-smoker who’s in good health, you should have several affordable choices for coverage.
The key is to buy coverage before you need it. When you lock in a decent rate while you’re still young, you’ll thank yourself later on in life.
A million dollar life insurance policy may sound crazy, but, if you have a family and a mortgage, you would be shocked just how much coverage you need.
Who needs a million dollar life insurance policy?
“More is better” might seem like the right approach for life insurance. Learn when $1 million in coverage makes sense and how to buy it.
Life is all about finding the right balance. The perfect blend of work and play, needs and wants, saving and spending.
You’ll face the same type of decision-making when shopping for life insurance. Purchasing too little coverage can leave your family underinsured, too much can have you allocating too much of your budget to life insurance.
If the unthinkable happened and your family faced a future without you, a life insurance policy is your family’s financial safety net. A good rule of thumb is to have coverage that’s about 5 to 10 times your annual salary. So if you earn $100,000 a year, a $1 million life insurance policy may be the right choice for you. Or if you earn less but have substantial debts like a mortgage or student loans, it could still be the right fit. A million-dollar term life insurance policy is probably more affordable than you think. A healthy 35-year-old woman can buy a 20-year, $1 million term life insurance policy from Haven Life for about $35 per month.
For those of you readers who want to understand all the factors that go into deciding if a $1 million life insurance policy is right for you, read on. If you want the cliff notes version to understand if it’s the right amount of coverage for you, try using an online life insurance calculator.
Eligibility for a million-dollar life insurance policy
If you’re thinking about buying $1 million in coverage, it’s important first to find out if you’re eligible. A combination of your age and salary information helps an insurer determine if you qualify for the amount of coverage you’re seeking. For most insurers, the maximum is anywhere between 10 to 30 times your annual salary with some variation based on your age. Typically, the younger you are, the higher your coverage eligibility is.
Most of the time, you’ll have no problem qualifying for the coverage you’re seeking if you’re employed (and assuming you’re eligible for coverage with your current health.)
Additionally, you should use your income as a barometer for how much coverage you really need. If you earn $30,000 a year, for example, $1 million in coverage might be excessive.
Rather than trying to guesstimate, an online life insurance calculator can help you find your ideal coverage and eligibility. This way, you can properly gauge your family’s needs without having to do any air-math during the process.
Determine if $1 million fits your life insurance needs
In general, you should get coverage that’s 5 to 10 times your salary, and make sure your coverage is enough to help account for:
- Your mortgage and other significant debts
- Child care and dependent expenses
- Intentions to pay for your child’s education
- Cosigned debts
- Health care costs for a non-working spouse and children
- The cost of a funeral and final expenses
After considering how your family could afford these expenses without your income, you might find that $1 million in coverage is just right. Or, you might decide that you’d rather have additional coverage to lock in affordably pricing for the next 10, 15, 20 or 30 years. Again, a life insurance calculator can factor in all this information to provide an estimate based on your family’s situation.
In situations where you’re considering the coverage needs of a stay-at-home parent, it can be a bit more difficult to determine the right amount of coverage since they don’t technically earn a salary. Typically, the child-rearing partner will be eligible for the same amount of coverage as the working spouse. And remember: yes, households should have coverage on stay-at-home moms and dads.
The price of a $1 million life insurance policy
It may surprise you how affordable $1 million in coverage can be. A healthy 35-year-old woman could purchase a 20-year, $1 million policy for about $35 per month. That’s a little more than $1 per day. Not a bad price for a significant amount of peace of mind. And, she gets to lock in that price for the next 20 years.
And remember, pricing for coverage is affordable the younger and healthier you are. That’s why, if you know you need coverage, you’ll want to lock in your lower rate now.
Rates are also impacted by the term length of policy you choose. A 30-year term costs more than a 20-year or a 10-year term.
The bottom line: Your age and health, the amount of coverage, and the length of your policy will all impact how much you pay for coverage each month.
|30-year term life insurance rates|
|20-year term life insurance rates|
|10-year term life insurance rates|
|Source: Haven Life|
Easy + Simple + Inexpensive
“The easiest, simplest process for receiving term life insurance. And the premiums were the lowest quote.” —Michael
Choosing the right term length for you
Term life insurance is a simple, affordable type of coverage that lasts for a specific period of time – 10, 15, 20 or 30 years. You pay for coverage during the years you need it most, until your kids are adults or your mortgage is paid off.
Picking the right term length is, again, all about balance.
A life insurance calculator will take into consideration your age, income, debts and family structure debts to provide a recommended term length as well as coverage amount that might be best for your situation.
A longer-term policy will cost more, but it also lets you use your current age to lock in a lower rate for a longer period of time. A shorter-term policy costs less per month for now, but when the term expires, you may still be in need of coverage. In that scenario, you’ll need to either buy a new policy or extend your coverage. Regardless, rates will be significantly higher because you’ll be quite a bit older.
Buying a million dollar life insurance policy
You purchase a million dollar life insurance policy to help financially protect your family in the worst of times. Therefore, it’s important to choose a company that you’re confident will be around for the life of your policy. Life insurance ratings are important to consider when shopping for a policy.
Life insurance companies receive ratings from independent agencies based on their financial strength, as well as the rating agency’s assessment of the company’s claims-paying ability. To put it simply: It’s an indication of the insurer’s ability to pay out a claim if you were to die.
For example, at Haven Life, our Haven Term policy is issued by MassMutual, which is rated A++ by A.M. Best. That’s the highest rating available from A.M. Best.
And thanks to modern technology, buying life insurance today is simpler than ever before. You can simply calculate your needs, get a quote, apply online and, if approved, start your coverage in the same day.
The online application will ask about your income, your family structure, and your health. Answer each question openly and honestly for the most accurate pricing and results.
At Haven Life, it’s even possible to buy up to $1 million in term life insurance without needing to take a medical exam. That’s because, in partnership with MassMutual, Haven Life has built technology that can analyze application information in real-time. If the life insurance company has a good enough understanding of your health and risk, the formality of an exam may not be needed. (However, it’s very important to be honest when completing the application. The issuance of the policy or payment of benefits depends on the truthfulness of answers in the application.)
Once an application is submitted, Haven Term applicants will know if a medical exam is needed to finalize coverage. In most cases, you will have temporary coverage in the time between application submission and when we receive the medical exam results.
You don’t have to predict the future
One downside of getting life insurance is that it makes you contemplate your own mortality, but that comes with an upside. By considering what would happen to your loved ones if you died, you also have to consider what you’re worth, financially speaking, and the answer is often a lot more than you think.
The best way to figure out how much life insurance coverage you might need, and how much you’re eligible for, is to use an online life insurance calculator like the one at Haven Life. In a few minutes, it can help you determine you and your family’s needs, and give you a personalized quote for coverage. After considering how your family could afford these expenses without your income, you might find that $1 million in coverage is just right, or you could discover that you need a bit more or a bit less.
So who needs a $1,000,000 life insurance policy? The answer may well be “you.” To find out for sure, try Haven Life’s easy-to-use life insurance calculator.
Peace of mind might be closer than you think.
Michael Davis is a freelance writer and editor who has covered everything from fashion and music to parenting, work, and finance. He has been a chef, restaurateur and record label owner.
Financial strength ratings are as of September 24, 2019: A.M. Best Company: A++ (Superior; top category of 15); Fitch Ratings: AA+ (Very Strong; second category of 21); Moody’s Investors Service: Aa3 (High Quality; fourth category of 21); Standard & Poor’s: AA+ (Very Strong, second category of 21). Ratings are for MassMutual (Springfield, MA 01111) and its subsidiaries, C.M. Life Insurance Co. and MML Bay State Life Insurance Co. (Enfield, CT 06082). Ratings are subject to change.
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About Michael Davis
Our editorial policy
Haven Life is a customer-centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.
Our editorial policy
Haven Life is a customer centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.
Our content is created for educational purposes only. Haven Life does not endorse the companies, products, services or strategies discussed here, but we hope they can make your life a little less hard if they are a fit for your situation.
Haven Life is not authorized to give tax, legal or investment advice. This material is not intended to provide, and should not be relied on for tax, legal, or investment advice. Individuals are encouraged to seed advice from their own tax or legal counsel.
Haven Term is a Term Life Insurance Policy (DTC and ICC17DTC in certain states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Haven Term Simplified is a Simplified Issue Term Life Insurance Policy (ICC19PCM-SI 0819 in certain states, including NC) issued by the C.M. Life Insurance Company, Enfield, CT 06082. Policy and rider form numbers and features may vary by state and may not be available in all states. Our Agency license number in California is OK71922 and in Arkansas 100139527.
MassMutual is rated by A.M. Best Company as A++ (Superior; Top category of 15). The rating is as of Aril 1, 2020 and is subject to change. MassMutual has received different ratings from other rating agencies.
Haven Life Plus (Plus) is the marketing name for the Plus rider, which is included as part of the Haven Term policy and offers access to additional services and benefits at no cost or at a discount. The rider is not available in every state and is subject to change at any time. Neither Haven Life nor MassMutual are responsible for the provision of the benefits and services made accessible under the Plus Rider, which are provided by third party vendors (partners). For more information about Haven Life Plus, please visit: https://havenlife.com/plus.html
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What our customers are saying
Life Insurance For Mortgage Protection
After purchasing a home, I decided to purchase a term life insurance policy that would pay off my mortgage and any other debts. I wanted to make sure my son wasn’t stuck having to worry about such things in the event of my untimely death. I didn’t really want to just do a general search online because I didn’t want all kinds of unsolicited phone calls. It just so happened my credit union sent me some information regarding life insurance through Haven Life for its members, so I looked into it. From start to finish, the process with Haven Life was extremely simple. After looking at different death benefits and policy years, I decided to submit an application. The application took minutes to complete and I was approved the very next day. The approval gave me an acceptable death benefit range, so I was able to increase the amount from what I had applied for and change the term. Boom, just like that, I’m covered. My son is aware I’ve put this policy in place and we both feel better knowing that if something happens to me, he’ll be able to take care of things.
“More is better” might seem like the right approach for life insurance. Learn when $1 million in coverage makes sense and how to buy it.