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Who needs a million dollar life insurance policy?

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To most people, a million dollars seems like a lot of money. But if you are thinking about purchasing life insurance, a million dollar life insurance policy may actually be a good choice – and one you should consider.

Determining whether you need that much protection will require you to sit down and go over both your current and your anticipated debts and expenses for the next few decades. But it can be time well spent in the unlikely event that you are no longer there to care for your family financially.

Determining if you need a million dollar life insurance policy

Financial experts suggest that you purchase a life insurance policy that is worth 5-15 times your annual income. So if you make $100,000 a year, a million dollar policy makes sense. You may also need that much coverage if you make less money but have significant debts that will need to be paid off. For example, if you have five children who will probably be going to college, you might need more than if you only have one child.

Other substantial debt, such as school loans, a large mortgage or a business loan, will also come into play when you are determining the amount of life insurance you need. The same is true if you have a partner or child with a disability who will need expensive medical care in the future.

If you are purchasing insurance for a stay-at-home spouse, you should consider how much the value of his or her work in the house is worth: what would it cost to hire someone to cook and clean, for example, if that person were not there?

Eligibility requirements

Not everyone is eligible for a million dollar life insurance policy. Again, you will need to sit down with the numbers to determine if you are likely to be approved for that amount when you apply to an insurer. There are other factors that insurers may look at, as well, including the following:

  • Your age. Someone who is 30 years old with young children is likely to need more coverage than a person who is 65 and retired. In the latter case, the individual’s children are likely grown and out on their own, with no need for support.
  • Your income. If you are just starting out in the workforce and make $30,000, it is not likely that you will be approved for a million dollar policy. In that case, you might only need $300,000-$500,000 worth of coverage to ensure that your loved ones are covered.
  • Your health. It is easier to qualify for life insurance when you are in good health. If you are suffering from a chronic illness, you may be turned down or the insurer may come back with a counteroffer of less coverage than you requested. You will also earn a better premium rate if you are a non-smoker.
  • If you have other life insurance. If you are applying for a second policy, the insurer is likely to take the amount of coverage in your initial policy into account when determining how much they will offer you for your policy.

Cost of million dollar life insurance

You might imagine that you would have to pay a great deal for a million dollar policy — but that is not necessarily true. If you are fairly young and in good health, a million dollars of coverage might only cost $30-40 a month.

The other factor to consider is how long your policy will be in effect. A 30 year term policy will cost more than a 10 year policy, for example. You will also pay slightly more if you are a man than if you are a woman, since men are statistically more likely to die at a younger age than women.

Here are some sample costs that will give you an idea of what to expect for a 35-year-old in good health who is a non-smoker:

Monthly premiums for million dollar life insurance policy
Policy term Male Female
10 years $27.85 $23.95
20 years $39.25 $33.26
30 years $69.27 $56.94

Benefits of a Million Dollar Life Insurance Policy

There are no limits on how your heirs can use the payout from your insurance policy. Any financial need, long or short term, is acceptable.

To start with, your policy may allow your beneficiaries to pay for funeral and burial costs. It may then be used for day-to-day expenses, or to pay off a mortgage, a car loan or school debt.

In the long term, your policy payout may allow your children to attend the college or university of their choice without incurring significant college loans. If you are a business owner, your policy may allow your heirs or business partners to continue running the business smoothly, with no financial setbacks due to your death.

Frequently Asked Questions

What is the best life insurance company?

Since every person’s circumstances are unique, a life insurance company that is good for one person might not offer the best rate to another. Your best bet is to get quotes from a variety of companies to see who can give you the best rate. A good place to start your search is with our Best Life Insurance Companies of 2021 list.

What is the difference between term life insurance and whole life insurance?

Term life insurance, as the name suggests, lasts for a certain period, or term — usually 10, 20 or 30 years. Whole life insurance lasts for the policyholder’s entire life as long as they keep paying the premiums. Whole life also features a savings component whose contents can be accessed by the policyholder before his or her death.

How much life insurance do I need?

That depends on what you are hoping your insurance will pay for, as well as factors such as your age, number of dependents and income. To determine how much you need, list all your debt, including mortgage, student loans and consumer debt, and add to that the amount it would take to support your family, which may include day-to-day expenses and tuition costs.

What determines my life insurance premium?

There are multiple factors that go into determining your premium. The length of the policy and its payout benefit impact your cost, as does your health, your age and other personal details about you.

Written by
Mary Van Keuren
Insurance Contributor
Mary Van Keuren has written for insurance domains such as Bankrate,, and The Simple Dollar for the past five years, specializing in home and auto insurance. She has also written extensively for consumer websites including and Slumber Yard. Prior to that, she worked as a writer in academia for several decades.