Getting the right amount of insurance is different for everyone. Find out if you are in need of a million dollar life insurance policy.
When first exploring the world of life insurance, the policy amounts may seem extraordinarily high. The majority of policies you encounter will be anywhere from $250,000 to multiple millions of dollars. Though this seems staggering, many people aim to have at least 5-10 times their yearly income as their life insurance policy amount. If you make around $100,000 per year, then you may be looking for a $1,000,000 life insurance policy to protect your loved ones after you’re gone. Of course, there are more factors than simply multiplying your income by 10. Let’s take a look at everything a million dollar life insurance policy entails so you can decide if a million dollar life insurance policy is right for you.
How Does a Million Dollar Life Insurance Policy Work?
As long as you pay your premiums, your loved ones will receive the million dollar payout
Do your research before deciding on a policy amount.
When you purchase a life insurance policy of any amount, you are entering an agreement with the insurance provider. As part of the agreement, you will pay your monthly premiums in exchange for the promise of a payout in the event of your death. In this case, that policy amount is one million dollars.
In order to get a million dollar life insurance policy, you will need to apply. Applying for life insurance requires you to submit a questionnaire, release your medical records to the insurance company, and—in most cases—undergo a medical exam.
Once you are approved by the insurance company, your coverage will begin and you start paying your monthly premiums in exchange for insurance coverage.
Are There Different Types of Million Dollar Life Insurance Policies?
The cost of your life insurance policy will greatly differ depending on the type of insurance you choose
Consult an insurance agent if you aren’t sure which type of insurance is right for you.
You are probably thinking that a million dollar life insurance policy will cost a fortune. For most policies, this is not the case. If you think that you need about a million dollars in coverage, then there are two avenues you can choose.
If you are looking for cheap life insurance coverage, then you should stick to exploring term life insurance policies. Term life policies are the most affordable way to get the coverage you need. Since your term life insurance policy will eventually expire, there is a good chance that the insurance company will never actually have to make that payout. Because of the expiring term, insuring you is a much lesser risk than the other option, which tends to be much more expensive. Bottom line—if you are on a budget, it is in your best interest to look for a cheap term life insurance policy.
The other option is permanent life insurance. Unlike an inexpensive term life insurance policy, permanent life insurance never expires. When you pass away, your surviving loved ones will receive the million dollar payout—as long as you pay your monthly premiums. Compared to a cheap term life insurance policy, permanent policies are riskier for the insurance company and will cost you more per month.
s a Million Dollar Life Insurance Policy Right For Me?
Not everyone will need a million dollars of life insurance—make sure you are making the right decision for your family
If you want to put your policy to pay for college, you may need a million dollar policy.
Before you decide on a million dollar life insurance policy, there are a few things you need to take into account. We recommend making some preliminary calculations based on your income—5-10x yearly income—and then prioritizing how you want the money to be spent. For example, if you have children you intend to put through college, you will need to add on those costs. Depending on how many children you want to finance for higher education, you could easily be looking at a million dollars worth of coverage.
Additionally it is essential to factor in any outstanding debts you have to make sure that they do not get automatically transferred to your loved ones after your passing. It is also a good idea to factor in the cost of end-of-life services like funeral costs.
What Will a Million Dollar Policy Cover?
Though it differs from provider to provider, it is important to know what your million dollar policy will cover.
Your life insurance policy will be able to pay for any outstanding medical bills.
Life insurance is the only way that you can financially protect your loved ones after you’re gone. Should you pass away within the designated term of your term life insurance policy, then your family members will receive the payout. If you have permanent life insurance, your family will receive the payout no matter when you pass away. When your family receive the payout, the million dollar policy amount can be used for any of the following:
- Funeral expenses
- College funds for your children
- Any remaining debts
- Outstanding medical bills
Though these are the most common expenses that are covered under life insurance, you should check with your provider to make sure your policy covers everything you need.
How Much Will a Million Dollar Insurance Policy Cost?
There are a lot of different factors that will affect how much you pay for life insurance
Your age is the most important factor when it comes to life insurance costs.
The cost of life insurance is different for everyone. Each person has their own priorities, lifestyle choices, and medical history that is evaluated by the insurance company. Beyond term life insurance vs. permanent life insurance, there are a number of personal factors that are evaluated by the insurance providers on a case by case basis. The process of determining whether or not you are a good candidate for life insurance and determining the monthly cost is called underwriting. Here are a few of the factors that you should be aware of before applying for a million dollar life insurance policy.
- Your health status
- Your medical history
- The results from your medical exam
- Nicotine use
- The length of your tem (term life insurance only)
- Your job
- Your hobbies
- Any riders you intend to add to supplement your coverage
Whether you choose to get a million dollar policy or not, all of these factors will be taken into account and will determine the cost of your monthly premium.
Though a million dollars worth of coverage isn’t for everyone, it is absolutely attainable if that is what you need. If you are looking for coverage on a budget, term life is the way to go. Ultimately, whichever coverage option or amount you choose, you are protecting your family’s future.