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How Much Is a Million-Dollar Life Insurance Policy?
The average cost for a million-dollar life insurance policy is anywhere from approximately $50 to more than $1,000 a month, depending on your age, health, annual income, policy type and other factors. You want to work with a life insurance company to find the policy that works best for your needs, budget, living expenses (including final expenses), annual income, future expenses and cash value.
Average Annual Cost for a 10-Year Term, $1 Million Policy
These quotes from Haven Life are based on a person who lives in California, is in good health and doesn’t smoke tobacco or use nicotine products.
| Age | Annual Cost for Male | Annual Cost for Female |
|---|---|---|
| 30 | $334.80 | $277.32 |
| 40 | $489.12 | $400.44 |
| 50 | $2,330.64 | $1,552.80 |
| 60 | $7,030.44 | $5,023.92 |
Annual Cost for a 20-Year Term, $1 Million Policy
| Age | Annual Cost for Male | Annual Cost for Female |
|---|---|---|
| 30 | $519.24 | $403.80 |
| 40 | $775.08 | $648.60 |
| 50 | $4,664.88 | $2,979.72 |
| 60 | $16,844.04 | $13,425.12 |
Annual Cost for a 30-Year Term, $1 Million Policy
| Age | Annual Cost for Male | Annual Cost for Female |
|---|---|---|
| 30 | $878.88 | $768.72 |
| 40 | $1,624.80 | $1,303.80 |
| 50 | $6,241.44 | $4,568.04 |
| 60 | NA | NA |
Factors that Influence the Cost of Million-Dollar Life Insurance Policies
The cost of annual or monthly premiums for a million-dollar life insurance policy depends on multiple things. Some you can control, some you can’t. They include your age and your gender, your overall health status, your lifestyle and occupation and the type of policy you want.
There’s no “one-size-fits-all” policy for any life insurance product, including those that pay $1 million or more in death benefits. Do your due diligence and research all your options. Let’s look at some of these elements.
Age and Health
Younger people who enjoy excellent overall health will see lower premiums than people who are older and have pre-existing medical conditions. Common pre-existing conditions include heart conditions, obesity, high blood pressure, and diabetes. If you’re looking to buy a million-dollar life insurance policy at a low rate, it pays to stay fit and to see a doctor for regular medical exams. Documentation from doctor visits helps insurance companies document your good health — and any pre-existing conditions.
Older people pay higher premiums for health coverage because they usually require more medical care. Federal regulations place caps on rates that insurers can charge for individual Affordable Care Act (ACA) plans, and some states regulate health insurance premiums even more. You may need to undergo a medical exam as part of the life insurance application process. A few plans promote the fact that they require no medical exam for someone to secure life insurance.
Gender
Gender is an underwriting factor for many life insurance policies — but not all. Some state governments consider gender-based pricing discriminatory and prohibit the practice. For states that base premium rates on gender, women enjoy lower rates than men.
However, while women may benefit from lower premiums initially, they may be subject to rate increases if they develop certain medical conditions or engage in risky behavior such as smoking or drinking alcohol excessively. Some insurers offer discounts for couples who purchase joint policies.
Type of Policy
There are two primary life insurance policy types to consider:
- Term life insurance
- Permanent life insurance (or whole life insurance)
It’s important to understand the benefits of each before deciding on which type of policy best meets your needs.
Term life covers someone for a fixed period, usually 10, 20, 25 or 30 years. Premiums associated with term life are lower than for other forms of life insurance. But once the term expires, coverage ends. Term life policies have no cash value benefits associated with them.
Permanent life provides protection for an indefinite period and includes a cash value component that grows as the policy ages. This policy is more expensive because of its increased flexibility and potential for building cash value. But the expense brings more features, such as long-term care or disability riders, which provide financial protection should an insured individual become disabled or require long-term health care.
As you consider these two policies, think about your budget, credit card debt, living expenses, financial goals and the type of coverage you need. Research your options and contact multiple life insurance companies to shop prices as you look at cost efficiency and quality coverage.
Lifestyle and Occupation
When shopping for a million-dollar life insurance policy, it’s important to consider lifestyle and occupation factors. Profession, high-risk hobbies, smoking, drinking, and travel can all have an impact on premiums.
Your profession can be a major determining factor in the cost of your million-dollar policy. People who work in dangerous or high-risk jobs will pay higher premiums than those with more sedentary occupations.
Smoking and drinking habits also influence premium costs. Smokers pay more than non-smokers because of their increased risk of developing health problems such as cancer or heart disease. Similarly, people who drink excessively may pay more because of their increased risk of developing alcohol-related illnesses, including liver disease and diabetes.
Coverage Amount and Length of Policy
How much coverage you want and how long the policy is in place are two other key factors that determine the cost. Term life insurance rates rise as the term length increases. The longer the term, the more expensive it will be. When determining a coverage amount, it’s important to consider your current financial obligations (college tuition, retirement costs, balloon payments, etc.).
When selecting a policy term length, you have several options. Short-term policies range from one to five years in duration, providing temporary coverage at lower premiums than those offered for longer-term policies.
Long-term policies can last 30 years or longer with whole life insurance as long as you keep paying your premiums. These policies have higher death benefits, but because of their longer duration, they also come with higher premiums.
It’s important to review your policy regularly — every three to five years — to ensure the coverage you’re paying for still reflects your needs. Life events like marriage, having children, job changes or retirement may require an adjustment in coverage amounts or term length. You will pay good money for your policy. Make sure it works for you as your life changes.
| Policy Length | Annual Cost for Male (30) | Annual Cost for Female (30) |
|---|---|---|
| 10 years | $334.80 | $277.32 |
| 20 years | $519.24 | $403.80 |
| 30 years | $878.88 | $768.72 |
Insurance Company and Underwriting Guidelines
Insurance companies and their underwriting guidelines have a significant impact on the cost of a million-dollar life insurance policy. Underwriting is the process of assessing an individual’s risk profile and determining what level of coverage to offer. Insurers use a variety of factors to determine someone’s risk profile, and no two underwriting guidelines are the same.
Underwriting starts with information about an applicant: age, health, family health history and lifestyle. Insurers use the information to assess how likely it is that they’ll need to pay out benefits in the future.
When choosing between policies, college quotes from multiple providers. Look at the financial ratings and reputations of each company. Then compare the prices and coverage amounts to decide which million-dollar life insurance policy is most affordable for your needs.
Tips for Finding Affordable Million-Dollar Life Insurance Policies
Finding an affordable million-dollar life insurance policy can seem like a daunting task, but with the right research and preparation, you can find a great policy that meets your needs. Here are some tips for finding an affordable million-dollar life insurance policy:
- Compare quotes: Comparing the cost of life insurance from multiple providers is important when shopping for million-dollar life insurance policies. Look into the variety of policies each has, such as term or permanent plans, and how rates compare to other companies. Also look at available riders and discounts.
- Check financial ratings: Before deciding which company to purchase a policy from, check their financial ratings from AM Best and other ratings agencies. This will give you a snapshot of reliability and long-term financial stability.
- Understand policy types: There are two main types of life insurance policies — term life and permanent life. Understanding the differences between them is key when considering which option is best for you. Term life policies provide coverage for only a predetermined period, while permanent life provides coverage for an indefinite period with the added benefit of accumulating cash value over time. Consider your budget, financial goals and coverage needs when researching different options.
- Review regularly: As life changes occur for you, review your life insurance policy regularly to make sure that it continues to meet your needs. If necessary, adjust your coverage amount accordingly so that you always have adequate protection.
- Optimize health and lifestyle: Demonstrating excellent health and lifestyle choices through proper nutrition and regular exercise is a strong rule of thumb for getting the best life insurance coverage needs at a lower life insurance premium.
- Work with an independent insurance agent: Research your options to buy life insurance by contacting several life insurance companies to receive life insurance quotes. Work with a licensed agent to explore types of life insurance, amount of life insurance and life insurance premiums.
Our Conclusion: Should You Have a Million-Dollar Life Insurance Policy?
A life insurance policy worth $1 million sounds like a lot of money. What’s most important in your decision regarding how much life insurance you need is evaluating all the needs of your family in the event of your death.
Consider your circ*mstances and financial goals when deciding whether a million-dollar life insurance policy is right for you and your loved ones. If you have dependents who rely on your income, you may need a $1 million death benefit (or more) to ensure their future financial stability. Also take into account other assets to help cover costs associated with medical bills or funeral expenses when you die.
Many factors affect the cost of a $1 million life insurance policy, so it can be beneficial to compare quotes from multiple life insurance companies to get the best deal while still supplying adequate levels of protection.
It’s up to each person to decide what type of coverage works best and if a million-dollar policy would be an appropriate choice given their current situation and needs.
Frequently Asked Questions
The average monthly premium for a million-dollar life insurance policy is anywhere from about $50 to more than $1,000, depending on the type of policy, age, health, and other factors.
Yes, anybody can get a million-dollar life insurance policy. And if you are in reasonable health, you’ll qualify for this life insurance coverage in your 20s and 30s.
The cost of a $5 million policy depends on the type of policy and the many factors involved in the application and underwriting processes. It can cost anywhere from about $3,000 in annual premiums for a 20-year term life insurance policy to $6,000 in annual premiums for a 30-year term.
A $100,000 term life insurance policy could cost you as little as $10.28 a month for a healthy woman in her 20s, and $11.86 for a healthy man of the same age. For many insurers, this is the minimum amount of coverage you can buy, making it your cheapest option. However, how much you pay comes down to your age, health, lifestyle and occupation.
Methodology: Our System for Ranking the Best Life Insurance Companies
Our team researches and ranks life insurance companies using an in-depth scoring system that considers the factors most important to consumers like you. Our analysis includes a comprehensive review of each provider we feature based on available coverage, customizability, availability, customer service and company reputation. Here are the factors we take into consideration when rating life insurance providers:
- Brand trust (40%): Life insurance payouts can exceed $100,000 or more, which makes choosing a reputable and trustworthy installer important. To assess brand trust, we use J.D. Power and Associates customer satisfaction surveys, AM Best credit rating scores and the National Association of Insurance Commissioners (NAIC) complaint index. The higher a company scores in each area, the more points it receives.
- Coverage (33%): The more policy options a life insurance company offers, the more opportunities you have to obtain the right coverage for your specific needs. For this reason, we give companies the most points for offering multiple types of life insurance, including various term, permanent and no-exam options.
- Availability and ease of use (19%): Since life insurance coverage options can be complex, we consider the ways a customer can reach a company — and how easy communication is. For this category, we research how many communication channels a company offers for general customer support, claims processing and the application process. Companies earn the most points for offering various ways to interact with an agent, both in-person and online.
- Riders (8%): Companies offering various life insurance riders or endorsem*nts allow policyholders to better customize their coverage. In this category, we determine how many riders a company offers and award the most points to providers with more than 10 options.
We use our rating system to compare and contrast each company against key factors to help us determine the best life insurance companies in the industry. To learn more, read ourfull life insurance methodologyfor reviewing and scoring providers.AM Best Disclaimer
David PaulContributing Writer
David Paul is the National Sales Director, Simplified Issue Life at AmeriLife. David’s storied career with AmeriLife started in 1990 as president of American Publishing and Advertising, AmeriLife’s in-house ad agency at the time, where he developed AmeriLife’s first logo as well as advertising materials for the senior market. In 2008, Paul became a marketing director with AmeriLife Marketing Group (AMG) taking on the role of national marketing director with AmeriLife affiliate AAA Marketing Services. Paul returned to AMG in 2014 where he has consistently been a high-achieving marketing director.
Tori AddisonEditor
Tori Addison is an editor who has worked in the digital marketing industry for over five years. Her experience includes communications and marketing work in the nonprofit, governmental and academic sectors. A journalist by trade, she started her career covering politics and news in New York’s Hudson Valley. Her work included coverage of local and state budgets, federal financial regulations and health care legislation.
