For most people, one million dollars sounds like a lot.
But, what about life insurance? Is a one million-dollar policy sufficient for life insurance? Is that too much?
Let’s take a look at the financial benefits of a life insurance policy worth a million dollars.
The Essentials of a One Million Dollar Life Insurance Policy
Let’s begin with the basics. If you are unable to work, life insurance provides financial protection for your loved ones. You may need more coverage depending on the stage of your family’s life.
Consider a couple who is newly married in their early twenties and has a child. Now, compare the two to see how they fare compared to a retired couple with children and substantial savings. The financial results could be drastically different if one spouse dies. A young couple might not have enough money in the bank to pay their daily expenses as an older couple.
The one-million-dollar death benefits might be sufficient for this retired couple. The newlyweds might need a higher death benefit to meet their growing family’s obligations.
What should life insurance cover?
Considerations that should be considered when making a decision about your mortgage payment, car payments and student loans, as well as personal loans, credit card debts, and mortgage payments are all important. Consider your daily living expenses as well as future costs, such as college tuition and retirement costs.
Depending on your situation, that $1 million figure can suddenly shrink.
While $1 million may seem like a large amount to apply for life insurance, it is a sensible decision to go a more strategic route. A calculator will help you determine the right amount of life insurance to cover your family’s needs if you are unable to work.
Who could get a life insurance policy worth a million dollars?
Let’s suppose you have decided that a one-million dollar life insurance policy is right for you. Next, check to see if it is possible. First, ask yourself if you can afford the monthly premiums for life insurance.
What is the cost of a life insurance policy worth one million dollars?
The premium for a one-million dollar term policy typically starts at $30+ per month. It then increases based on your health and age.
These are some factors that influence the price for the policy:
- Lifestyle factors (e.g. skydiving or smoking).
- Gender (women live longer than men)
- Type of policy (Term vs. Permanent) Permanent)
Term vs. Permanent for a Million Dollar Policy
A one-million dollar permanent life insurance policy will cost you significantly more than a term policy of the same face-value. Term insurance is cheaper because these policies don’t accrue cash value and expire after a set period of time (the “term”)
If you had a $1 million 20-year term insurance policy, you would have to pay your monthly premiums. However, if your death occurred during this time, your policy would be terminated at 20 years. You might have paid $40 per month for this policy.
You may have to pay hundreds of dollars a month for a permanent policy worth one million dollars, but it will be permanent. It will also accumulate cash value if it is kept long enough. This can be accessed in the event of an emergency.
Do I need to take a medical exam?
Next, you may ask “How do I get a life insurance policy?” Only if you are considered to be a reasonable risk will the insurance company offer you a policy. This is done through a process called Underwriting. They will ask you questions about your health, conduct a medical exam, and/or request medical records from third parties.
No Medical Exam Options
Insurance companies often advertise that there is no medical exam required for their plans. These are usually for policies with lower face values than one million dollars.
Express policies without exams are sometimes available up to $300,000. However, any higher and you will need to be underwritten more closely. You may be able find a few companies that offer up to $1,000,000 without requiring a medical exam. Even with these great offers, it is possible that you will not be able to complete the entire process without a second exam.
It is important to know what a million-dollar policy in life insurance means in today’s market. This is a great starting point to help you make your own life insurance decisions. Next, you should look into your needs to find the right insurance product for you.