Million Dollar Life Insurance Policy

    Million-Dollar Life Insurance: Is It Right For You?

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    If you have people who depend on you for financial support, you should seriously consider getting life insurance. With a life policy, you can provide your family with long-term financial protection, even if something untoward happens to you in the future.

    But, not all life insurance policies are created equal. Depending on your personal needs and situation, you may need a life insurance policy that pays up to one million dollars after you die. While this may seem like it's too much, there are plenty of reasons why getting million-dollar life insurance may be right for you.

    Here, we'll explore all the reasons you should consider getting a million-dollar policy. We'll also discuss how to shop for this amount of life insurance coverage and how much it can cost.

    What Is A Million-Dollar Life Insurance Policy?

    As the name suggests, a million-dollar life insurance policy pays out one million dollars to your beneficiaries if you die within the coverage period. Your dependents can use this money to cover their daily living expenses or to fund their education. They can even use this to pay off your outstanding debts or to cover your funeral expenses.

    The insurance company can pay out the death benefit from your one-million-dollar life insurance policy as a lump sum or as an annuity. For annuities, your beneficiaries will receive the money in annual installments. The insurance company will invest the rest of the money so that it can earn interest.

    Keep in mind that million-dollar life insurance isn't limited to one million dollars. Some policies can have a death benefit of up to $3 million.

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    Do You Need A Million-Dollar Life Insurance Policy?

    People who are breadwinners of their families can use a one-million-dollar life insurance policy as a form of income replacement. But even though you expect your family to live off the proceeds from the policy for a decade or so, you might not need million-dollar life insurance.

    To calculate exactly how much life insurance you need, you can multiply your annual salary by the number of years you'll need to replace it. For example, if you have very young children who will depend on your income for the next 20 years, you'll need to multiply your annual salary by 20.

    You should also add up the outstanding balance from your mortgage or other large debts. Don't forget to factor in credit cards or personal debts that you owe, as well. If you're a business owner, you should also consider your business' financial obligations.

    Aside from the ones mentioned, you should consider the cost of your children's college tuition. College costs get more and more expensive each year, so be sure to factor in inflation when calculating exactly how much you'll need to spend on this.

    Finally, your life insurance should cover your expected funeral costs. Funeral costs can easily reach thousands of dollars, so be sure to leave your family with enough money to pay for your memorial service, burial, and other final expenses.

    Once you come up with a ballpark figure, subtract the coverage from your existing life insurance policies, savings, or other assets. If the final amount reaches up to 1 million, then you need a 1-million-dollar life insurance policy.

    In case you want help figuring out the exact amount of life insurance you need, feel free to contact a life insurance agency. They'll help you assess your financial obligations and provide you with life insurance quotes based on the coverage amount you want.

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    Are You Eligible For Million-Dollar Life Insurance?

    Unfortunately, not everyone is eligible to buy a million-dollar life insurance policy. Life insurance companies will check if you're buying a reasonable amount of coverage based on the factors below.

    Annual Income

    Usually, young and healthy people can get life insurance coverage that's 10 to 30 times their annual salary. So, if you've just landed your first job and don't have much income, the life insurance company may not grant you 1 million dollars in coverage. You can apply for a million-dollar life insurance policy later when your annual salary increases.

    As for stay-at-home moms or dads, they can usually get life coverage that's 10-15 times their spouse's income. In short, they're eligible for the same amount of coverage as their spouse.


    People who are younger than 40 years old can also buy life policies that are 25 to 35 times their annual income. Those who are in their retirement years may only be granted a small policy unless they're high-net-worth individuals who earn thousands of dollars each year in terms of dividends.

    Existing Coverage

    Life insurers will usually look at your existing life insurance coverage before deciding how much to offer you. For example, if you apply for a 1 million dollar life insurance policy, but you already have an existing policy that provides coverage of up to $250,000, then the life insurance company might only offer you a policy with a face value of $750,000.

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    How Much Does A Million-Dollar Life Insurance Policy Cost?

    Generally, the higher your coverage, the more expensive your premiums will be. For a 1 million life insurance policy, it's understandable that you might think that the premiums will be too expensive for you to afford.

    Still, that doesn't have to be the case. You can get a one-million-dollar policy without emptying your savings.

    One option you can look at is getting a million-dollar term life insurance policy. Premiums for a term life insurance policy are cheaper because it only provides you with coverage for a set number of years and not your entire life. Plus, it doesn't build a cash value, which is a factor that will often drive up the life insurance policy cost.

    Here is a sample computation for a $1 million life insurance policy with a 20-year term:

    • 25-year-old man: $52.94/month
    • 25-year-old woman: $40.69/month
    • 35-year-old man: $54.59/month
    • 35-year-old woman: $45.94/month
    • 45-year-old man: $125.56/month
    • 45-year-old woman: $94.06/month

    In case these prices for a 20-year term life policy seem a little steep to you, you can use a life insurance calculator to figure out the life insurance rates you'll need to pay depending on the coverage you want.

    Keep in mind that if you have children who will depend on your income your whole life, you might want to get a permanent life insurance policy with a face value of $1 million instead. This is important if you have a child with special needs who will require long-term financial support. Contact your agent to get a life insurance quote for a universal life or whole life policy.

    Life Insurance Cost: Additional Factors

    Aside from your desired coverage, there are other risk factors that affect the price of premiums you'll pay. Your overall health, driving record, and age will all be taken into consideration. If you're a smoker, you should also expect to pay higher premiums.

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    How To Get A Million-Dollar Policy

    If you'd like to be insured for a million dollars, but you're not sure how to do it, don't worry. In this section, we'll discuss two ways you can achieve this goal.

    The simplest way is to buy a term life insurance policy with a face value that's worth $1 million. If you qualify for this coverage, simply reach out to the life insurance company to start the application process.

    Another way to get million-dollar term life insurance is by laddering two or more policies. For example, you can buy a term policy that provides coverage for $250,000 at $25 per month. Later on, when you’re older and your annual income increases, you can purchase another policy with a face value of $750,000 for about $28 per month. Together, both policies provide your family with $1 million worth of coverage.

    There are several advantages to laddering life policies this way. Primarily, you can purchase insurance with a lower face value when you're younger and take advantage of cheaper premiums. Another advantage is that you can buy policies from different life insurance companies. That way, your family can claim a death benefit even if one company suddenly goes out of business or files for bankruptcy.

    Laddering life insurance is also advantageous is because it allows you to let some of your term policies expire as your need for insurance changes. When you're starting a young family, you'll need large coverage to ensure that your children will have adequate financial support. 

    As you grow older and your children become financially independent, you won't need as much coverage. In that case, you can let your first policy expire and pay fewer premiums.

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    Final Thoughts

    One million dollar life insurance policies can act as a long-term financial safety net for your loved ones. Your children can use proceeds from your term policy for their daily expenses or education.

    If you're interested in getting a million-dollar term policy, get in touch with Wesley Insurance, LLC. We can discuss your life insurance options and help you apply for policies at different life insurance companies.

    Written By Cameron McDowell
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