How Much Is One Million Dollars of Life Insurance Coverage?

Let’s face it, being a millionaire is something most people only dream about, but just because you’re not rolling in the dough doesn’t mean you should rule out a million-dollar life insurance policy.

In fact, million-dollar policies are fairly common and may be more affordable than you think.

When deciding if a million-dollar policy is right for you, here are the three most common questions:

1. Can anyone get a million-dollar life insurance policy?
2. When does a million dollars of coverage make sense?
3. How much does a million-dollar life insurance policy cost?

To answer these questions, let’s take a closer look with a common scenario and example pricing for different age groups, genders, and term lengths.

» Calculate: Life insurance needs calculator

Can anyone get a million dollar life insurance policy?

In order to qualify, insurance companies require a financial justification for large policies because life insurance is designed to replace wealth, not increase it.

There are also a number of factors that go into determining if you’re eligible for a million dollars of coverage. These include age, income, health, lifestyle, and length of coverage.

Not everyone can justify owning a million dollars of life insurance. However, purchasing a million-dollar policy doesn’t seem far-fetched when you add up all the financial obligations you would leave behind.

This can include the cost to replace your income, pay off the mortgage, send children to college, and take care of any other outstanding debt.

A million-dollar life insurance policy doesn’t seem far-fetched when you add up all the financial obligations you would leave behind. They’re also more affordable than you may think.

When does a million dollars of coverage make sense?

Not everyone needs a million dollar life insurance policy, but it can make sense in many family situations.

Let’s look at a common scenario in which one million dollars’ worth of life insurance makes sense and then we’ll breakdown the costs.

Example: Married couple with four kids and a house

John and Jane Smith each make approximately $60,000 annually. They have four children and live in a five-bedroom home with a $400,000 mortgage.

If either parent died, their wish would be to minimize the disruption by having enough coverage to take care of the mortgage, so the surviving spouse and children don’t have to move.

Another wish would be to take care of college tuition for all four children. Depending on state and whether it’s public or private, the average total cost can range from $154,400 to $535,660.

Using the life insurance needs calculator on Quotacy, here are some of the factors and costs that go into determining out how much life insurance coverage John and Jane need.

They want their life insurance policy to:

• Cover a funeral: $10,000
• Pay off mortgage: $400,000
• Replace lost income: $600,000
• Pay for children’s college tuition: $155,000

Based off these numbers, the suggested coverage amount for each would be $1,200,000.

For this example, we didn’t include additional debt, current savings and investments, or if they have a life insurance policy they plan to keep. These factors could significantly impact the dollar amount needed.

» Compare: Comparison shop the best life insurance rates

How much does a million dollar life insurance policy cost?

Now that we know John and Jane could each use at least a $1,000,000 term life insurance policy, let’s breakdown how much this would cost them.

In the expandable box below, we’ll illustrate the cost of a $1,000,000 policy across a couple ages and the typical non-smoker risk classes (Preferred Plus being the best possible class offered.)

Had John and Jane planned ahead and purchased a 30-year $1,000,000 term policy when their first child was born, they would be paying much lower premiums. Take a look at the table in the expandable box below.

A one-million-dollar life insurance policy may not be necessary for everyone. But, on the other hand, it might not be enough depending on your family situation.

If you are not sure how much life insurance you need, check out our life insurance needs calculator. It will point you in the right direction. From there you can run a term life insurance quote.

Using our quoting tool makes getting life insurance quotes simple. You can also adjust the term length and coverage amount as much as you need until you find a policy that fits well in your budget.

Plus, you don’t need to give up any contact information to run a free life insurance quote.

» Learn more: How Much Life Insurance Do I Need?

Note: Life insurance quotes used in this article are accurate as of August 6, 2020. These are only estimates and your life insurance cost may be higher or lower.