What Does Million Dollar Life Insurance Really Mean?

A million dollars seems like a lot of money, and for most of us, it is.

However, when it comes to life insurance, is a million dollar life insurance policy enough? Is it too much?

Let’s take a look at what million dollar term life insurance really means for your financial security.

The Basics of One Million Life Insurance

First, let’s start with a few basic facts. Life insurance is the financial protection you provide to your loved ones when you die. Depending on the stage of your family’s life, you may need to spread more or less.

For example, consider a couple in their early twenties with a baby on the way, and then compare it to a retired couple with grown children and a larger income. If a spouse dies in either situation, the financial results can be very different. Younger couples may not have as much savings in the bank to pay for their shopping expenses than older couples.

In this example, a death benefit of one million dollars would be sufficient for the retiree. However, newlyweds may see the need for a large death benefit when they consider their responsibilities as a young and growing couple.

What is the need for life insurance?

Factors to consider in your decision include mortgage payments, car payments, student loans, personal loans, credit cards and other loans. You should also consider day-to-day expenses and future expenses (such as children’s college tuition and retirement).

Depending on the situation, suddenly the big number of $ 1 million can start to decrease.

While $1 million seems like a nice, round amount when applying for life insurance, it makes sense to take the best approach. Using a calculator to help you decide the amount of life insurance that is right for your situation will give you a better idea of ​​how much money you need to support your loved ones when you die.

Who can get million dollar life insurance?

Let’s say you decide that a million dollar life insurance policy is the right investment. Next, you should see if you can find one. The first question you should ask yourself is, “Can I afford to save the monthly payments to run this plan?” When you buy life insurance, you pay monthly to keep working.

How much does a million dollar life insurance policy cost?

Generally, million dollar premiums start at around $30+ per month and then go up from there depending on your age and health.

Here are some of the factors that affect the cost of this plan:

  • Age
  • Living things (for example, skydiving or smoking)
  • Health
  • Gender (women tend to live longer than men)
  • Type of policy (Temporary vs. Permanent)

Term vs. Permanent for a Million Dollar Policy

Buying a million dollar term life insurance policy will have a significant difference in terms of term life insurance with the same value. Term insurance will be cheaper, as these policies do not have a fixed cash value and expire after a certain period of time (“term”).

For example, if you have a 20-year policy for $1 million, you will pay your monthly premiums for 20 years, and if you do not die during that time, your policy will expire for 20 years with no cost after that. that. As mentioned earlier, you may be paying $40 a month or more for this plan.

On the other hand, you can pay hundreds per month to get a fixed income of one million dollars, but the plan will be, as the name suggests, regular. If you keep it long enough, it will also earn money that can be accessed when needed.

Should I Take a Medical Exam?

Your next question may be, “What is the process of obtaining a policy?” An insurance company will offer you life insurance only if they feel it is the right risk for them. The way the insurance company guarantees this is a process called underwriting. They will ask you health questions, perform medical tests and/or obtain medical records from third parties.

No Clinical Trials

Some insurance companies advertise that “no medical tests are required” in their insurance plans. However, these are usually for points that cost less than a million dollars.

No-examination insurance policies can sometimes reach $300,000, but the higher it is, the more research you’re looking to get. You might even find a company or two that offers $1 million without a medical exam. But even with this, there is a good chance that you will not go through the entire process without a follow-up exam.

The end

Knowing what a million dollar life insurance policy means in today’s market and in today’s dollars is important to understand. It’s a good starting point for making your own life insurance decisions. So, your next step should be to dive deeper into your needs and find the insurance that is right for you.

Finally, if you need help with this process, we recommend speaking with an independent insurance agent. As a licensed professional, an agent can help you compare products and insurance companies to find the best solution for your case.