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Let’s face it. When considering your life insurance cost, large policies cost money. Being a millionaire is something most people only dream of becoming. Most never realistically think they’ll have a million dollars, so why are million-dollar life insurance policies so commonplace? And how much does a million-dollar policy for life insurance cost? Do you need that much coverage?

» Compare million dollar term policy prices: Term life insurance quotes

Can Anyone Get a Million Dollar Life Insurance Policy?

Not everyone can justify owning one million dollars worth of life insurance. Insurance companies require a financial justification for large policies because life insurance is designed to replace wealth, not increase it. However, a million dollars in life insurance coverage is actually fairly common.

Purchasing a million-dollar life insurance policy doesn’t seem far-fetched when you consider how much it costs to replace your income, pay off the house, send children to college, and relieve your family’s financial burdens after you’re gone.

» Calculate: Life insurance needs calculator

How Much Does a Million Dollar Life Insurance Policy Cost?

First, let’s look at a common situation in which one million dollars’ worth of life insurance makes sense and then we will breakdown the costs.

Example:

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 John or Jane died, their wish would be to ensure the children be able to stay in their childhood home and not have to move out of their school district. Essentially, disrupt their lives as little as possible upon the death of a parent.

Using the life insurance needs calculator on Quotacy, you can see in the screenshot below that a $700,000 policy would be a good start to ensure that the mortgage is able to be paid off, to replace the lost income, and cover a funeral.

This number does not include college tuition costs for four children, which can range from an average total of $154,400 to $535,660, depending on the state and whether it’s public or private. Suddenly, that $700,000 policy doesn’t seem like that much money. After taking tuition into account, John and Jane would each be more suited to buying $854,400 to $1,235,660 in life insurance.

How much life insurance do I need?

 

If you have a family and make a decent income, owning one million dollars of term life insurance is actually not that far-fetched. This is because term insurance is quite affordable, even one million dollars’ worth.

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So, now that we know John and Jane could each use a $1M term life insurance policy, let’s breakdown how much this would cost them. For example’s sake, we don’t know how old John and Jane are nor do we know their health status, so I’ll illustrate the cost of a $1M policy across a couple ages and the typical non-smoker risk classes (Preferred Plus being the best possible class offered.)

Cost of a One Million Dollar Term Life Insurance Policy

Male, Age 40

Risk Class20-Year Term
Monthly Premium
25-Year Term
Monthly Premium
30-Year Term
Monthly Premium
Preferred Plus$55$86$102
Preferred$69$103$124
Standard Plus$95$142$169
Standard$115$172$203

Cost of a One Million Dollar Term Life Insurance Policy

Female, Age 40

Risk Class20-Year Term
Monthly Premium
25-Year Term
Monthly Premium
30-Year Term
Monthly Premium
Preferred Plus$52$70$83
Preferred$59$85$96
Standard Plus$77$110$126
Standard$97$140$156

Cost of a One Million Dollar Term Life Insurance Policy

Male, Age 45

Risk Class20-Year Term
Monthly Premium
25-Year Term
Monthly Premium
30-Year Term
Monthly Premium
Preferred Plus$93$147$161
Preferred$114$170$195
Standard Plus$162$223$270
Standard$184$283$322

Cost of a One Million Dollar Term Life Insurance Policy

Female, Age 45

Risk Class20-Year Term
Monthly Premium
25-Year Term
Monthly Premium
30-Year Term
Monthly Premium
Preferred Plus$77$110$133
Preferred$92$129$144
Standard Plus$122$164$190
Standard$137$201$233

As you can see in the tables above, even for individuals in their 40s, one million dollars’ worth of term life insurance is not that expensive considering how much your loved ones would receive if you died too soon.

» Compare: Term life insurance quotes

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

Cost of a One Million Dollar Term Life Insurance Policy

30-Year Term Length

Insured at 30 Years of Age

WhoRisk ClassMonthly Premium
John SmithPreferred Plus$60
Preferred$79
Standard Plus$103
Standard$127
Jane SmithPreferred Plus$48
Preferred$61
Standard Plus$84
Standard$97

A one million dollar life insurance policy is not necessary for everyone. If you are not sure how much life insurance you need, play around with our needs calculator. It will point you in the right direction. From there you can run a term life insurance quote.

Using out DIY quoting tool makes getting life insurance quotes easy and you can adjust the term length and coverage amount as much as you need until you find a policy that fits well in your budget. Did we mention you don’t need to give up any contact information to run a quote? Running life insurance quotes has never been easier.

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

Photo credit to: Emma Freeman

About the writer

Headshot of Natasha Cornelius, a life insurance writer, for Quotacy, Inc.

Natasha Cornelius

Writer, Editor, and Co-host of Quotacy's Q&A Fridays

Natasha is the content manager and editor for Quotacy. She has been in the life insurance industry since 2010 and has been making life insurance easier to understand with her writing since 2014. When not at work, she's probably studying and working toward her Chartered Life Underwriter (CLU) designation while throwing a tennis ball for her pitbull mix, Emmett, or curled up on her couch watching Netflix. If it’s football season, the Packers game will be on. Connect with her on LinkedIn.

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