Who needs a million-dollar life insurance policy?

Losing a loved one is devastating. The last thing anyone wants is to leave their loved ones to struggle financially in their absence. A million-dollar life insurance policy can provide a meaningful safety net, which can allow your loved ones to stay in their home, keep up with daily expenses and cover major costs like college tuition or outstanding debts, offering some relief during an already difficult time.

However, not everyone needs this level of coverage, but if you have a family depending on your income, a mortgage to pay off or long-term financial commitments, it could be worth considering.

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Whole life insurance combines life insurance with an investment component.

• Coverage for life
• Tax-deferred savings benefit if premiums are paid
• 3 variations of permanent insurance: whole life, universal life and variable life include investment component

Term life insurance is precisely what the name implies: an insurance policy that is good for a specific term of time.

• Fixed premium over term
• No savings benefits
• Outliving policy or policy cancellation results in no money back

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Who needs a million-dollar life insurance policy?

If your passing would leave your family with substantial expenses or financial uncertainty, this level of coverage could offer the protection they need. Here are a few situations that might benefit most from this level of policy:

1. High-income earner: If you make $100,000 or more per year, industry experts often recommend a starting coverage amount equal to 10 to 15 times your income. A million-dollar policy can help replace lost earnings and maintain your family’s standard of living.
2. Parents with young children: Raising children comes with major financial commitments — housing, childcare, daily expenses and future college tuition. This policy amount can provide long-term stability and ensure their needs are met.
3. Homeowners with a mortgage: If your family depends on your income to cover mortgage payments, this coverage can help them stay in their home without financial strain.
4. Business owners and key employees: Entrepreneurs and key executives may need this level of coverage to protect business continuity, settle outstanding debts or fund buy-sell agreements.
5. Stay-at-home parents: A stay-at-home parent provides important services like childcare, home management and daily household support. Replacing these contributions can be costly, and life insurance can help cover those expenses.
6. Individuals with large debts or dependents: If you have co-signed loans, outstanding debts or other financial commitments — such as caring for aging parents or a child with special needs — a million-dollar policy can help ensure those obligations are met.
7. Estate planning and high-net-worth individuals: A large life insurance policy can help offset estate taxes, provide liquidity for heirs and serve as a strategic tool for wealth transfer and legacy planning.

If you see yourself in any of these, a million-dollar life insurance policy might be worth considering. Even if you don’t, a financial professional can help determine the right amount of coverage for your situation.

Can anyone get a million-dollar policy?

A million-dollar life insurance policy might sound like a big number, but for many people, it’s simply about covering major financial responsibilities. That said, not everyone will qualify. Life insurance companies don’t just approve large policies without reason — they look at things like income, health, lifestyle, age and existing coverage to determine if this level of protection makes sense. If you’re applying for a high death benefit, be ready to justify why you need it based on your financial situation.

Here’s what insurers typically consider:

• Age: Younger applicants may have a harder time qualifying for millions in life insurance coverage. For example, if insurers see a 21-year-old applying for a $1M policy, they are going to take a close look at financials.
• Income and justification: Life insurance is meant to replace lost income and cover big financial obligations. If you make $200,000 a year, a million-dollar policy (5x income) is a reasonable starting point. But if you earn $40,000 annually, you’d likely need to explain why you need that much coverage — maybe you have substantial debts, own a business or have dependents with long-term care needs.
• Health and lifestyle: Your medical history, smoking status and overall health and lifestyle play a big role in whether you qualify. A healthy 35-year-old non-smoker will generally have a much easier time getting a million-dollar policy at a good rate than someone with chronic conditions or a high-risk job or hobbies (think firefighters or rock-climbling enthusiasts).
• Existing life insurance coverage: If you already have a $750,000 life insurance policy, your insurer might cap how much additional coverage you can get. This is to prevent people from being overinsured — life insurance is meant to provide a financial cushion, not an excessive payout.

Questions to ask yourself before getting a million-dollar life insurance policy

Before moving forward, take a step back and consider these key questions as they will help you brainstorm about whether a million dollars in life insurance coverage is right for you:

• Would my family need to replace my income to maintain their lifestyle?
  If your household depends on your earnings, would a million-dollar policy provide enough support to cover daily expenses, bills and long-term needs?
• What major financial obligations would my loved ones still have?
  Do you have a mortgage, student loans or other debts that would need to be paid off? Would your children’s college tuition or your spouse’s retirement still be covered?
• Do I have dependents who will need financial support for years?
  If you have young children, a spouse who doesn’t work or family members with special needs, would they have enough to maintain stability long-term?
• Do I already have life insurance coverage?
  If you have a policy through work or another provider, is it enough? Or would an additional policy help fill any gaps?
• Would my spouse or dependents struggle financially without my income?
  Could they comfortably cover household expenses, childcare or medical costs without your support?
• Am I factoring in inflation and the rising cost of living?
  Will the amount I choose today still provide enough 10, 20 or 30 years down the road?

A million-dollar policy isn’t for everyone, and the right amount depends on your financial situation, lifestyle and long-term goals and aspirations for your family. Taking the time to answer these questions can help you decide if this level of coverage makes sense for your family’s future.

Cost of million-dollar life insurance policy

According to the LIMRA and Life Happens 2024 Life Insurance Study, 72 percent of people overestimated the cost of life insurance. It’s likely a million-dollar policy costs less than you think.

One Reddit user, along with many others in the forum, shared their costs. “My spouse and I are in our early 30s and healthy. I got 30-year-term life insurance for $1M for her and $1.5M for me. We pay $70 and $100 per month respectively.” These prices are specific to those individuals. The actual price of your million-dollar policy depends on several factors which we’ll review below. Generally, younger and healthier applicants pay less, and permanent policies cost significantly more than term life insurance.

Personal factors

Several personal factors influence how much you’ll pay for a million-dollar policy:

• Age: The younger you are, the lower your premiums. Insurers consider younger applicants lower risk since they’re statistically less likely to pass away soon.
• Health history: Medical conditions, family health history and overall well-being play a big role in determining your rate.
• Lifestyle and occupation: If you have a high-risk job or participate in dangerous hobbies (like skydiving, scuba diving or racing), expect to pay higher premiums.
• Smoking status: Tobacco users almost always pay more due to higher health risks and shorter life expectancy.
• Gender: On average, men tend to pay more than women since their life expectancy is statistically lower.

Type of life insurance

The type of life insurance you choose significantly affects how much you’ll pay. Here are three policy types you’ll likely encounter:

• Term life insurance: The most affordable option; term life policies provide coverage for a specific period (10, 20 or 30 years). If you outlive the term, the policy expires without a payout.
• Whole life insurance: Offers lifelong coverage (up to a coverage age range of 95 to 121) and builds cash value over time, but comes at a much higher cost — often 10 to 15 times more than term policies.
• Universal life insurance: Typically costs less than whole life, but more than term. A more flexible option, allowing you to adjust your premiums and death benefit over time. However, premiums can fluctuate based on the policy’s performance.

For the average family, if one million dollars of coverage is needed, a term policy is typically going to be the best option. Living expenses — especially mortgage payments — the costs of raising children and income replacement are the most common reasons behind the need for life insurance. The years the term policy provides financial protection can be aligned with those financial obligations. It’s a much more affordable route than buying a million-dollar permanent life insurance policy.

Life insurance pricing varies widely between providers, so the best way to get an accurate idea of what you’ll pay is to compare quotes from multiple insurers. Each company has different underwriting guidelines, meaning one provider might offer lower premiums than another for the same coverage.

Is a million-dollar life insurance policy worth it?

A million-dollar life insurance policy can offer serious financial protection, but it’s likely not the right move for everyone. Before deciding, consider some of these benefits and drawbacks.

Pros

• Covers big expenses like a mortgage, college tuition and everyday bills
• Replaces lost income so your family doesn’t have to struggle financially
• Pays off debts like personal loans, medical bills or business obligations
• Helps with estate planning by covering taxes or leaving an inheritance
• Supports business owners by funding buy-sell agreements or succession plans

Cons

• Costs more than smaller policies, especially if you choose permanent coverage
• Might be more than you need, which means spending extra on premiums
• Health issues or risky jobs could make it harder to qualify for this amount of coverage
• Could trigger estate taxes if not planned for properly

A million-dollar policy can be a smart financial move, but it’s not a one-size-fits-all solution. Take a close look at your expenses, assets and long-term goals before deciding. If you’re on the fence, talking to a Chartered Life Underwriter or financial professional can help you figure out what makes sense for your situation.

Frequently asked questions

• What is the best life insurance company?

  The best life insurance company depends on you — your budget, health and what kind of coverage you need. Some insurers focus on low-cost policies, while others offer customizable options with extra features. If you have pre-existing conditions, comparing providers is key. Underwriting rules vary, so one company may offer better rates for certain health conditions, while another may charge higher premiums or limit coverage.

  When evaluating insurers, consider:

  • Customer service reputation: Are they known for being responsive and helpful?
  • Financial stability: Do they have strong financial strength ratings and a history of paying claims?
  • Policy flexibility: Can you customize coverage with riders or adjust as your needs change?
  • Claims process: Is it fast and straightforward, or slow and complicated?

  Since pricing and approval vary by company, getting multiple quotes and working with an independent agent can help you find the best coverage at the most competitive rate.

• Can an average person get a million-dollar life insurance policy?

  Yes, many people can qualify for a million-dollar life insurance policy, but approval depends on income, age and overall health and lifestyle. Insurers typically cap coverage at 20 to 30 times your annual income for younger applicants. So, if you make $50,000 per year, you could qualify for up to one million in coverage. If your income is lower, insurers may still approve a high policy amount based on financial obligations like a mortgage, dependent care or outstanding debts.

• What’s the highest life insurance policy you can get?

  Everyone has an insurability limit to prevent being overinsured. Some high-net-worth individuals can qualify for policies worth tens of millions, but this requires extensive financial documentation and medical underwriting. For example, in February 2024 someone set a Guinness World Record for the largest life insurance policy at $250 million. However, most standard policies will be significantly less than this and the coverage amount you qualify for will be specific to your needs.

• Can I get a million-dollar life insurance policy without a medical exam?

  Yes, some insurers provide no-medical-exam life insurance with coverage limits up to $1 million or more, depending on age and health history. Certain companies, like Lincoln Financial and Symetra, offer accelerated underwriting programs that approve eligible applicants anywhere from $100,000 to $5 million without a medical exam. Which led them to tie for Best No-Exam Life Insurer in the 2025 Bankrate Awards. However, these policies are generally reserved for younger, healthier applicants and may still require a review of prescription history, past medical records and financial status.

• Do you have to pay taxes on a million-dollar life insurance policy?

  In most cases, life insurance death benefits are tax-free at the federal level. However, if the policyholder’s estate exceeds federal estate tax exemptions, the payout may be subject to estate taxes. High-net-worth individuals often use irrevocable life insurance trusts (ILITs) to keep the policy separate from their taxable estate. If you’re unsure about potential tax implications, consulting a financial advisor or tax professional is often a smart move.