Who Needs a Million Dollar Life Insurance Policy?

For most people, a million dollars seems like a lot of money. But if you’re thinking about getting life insurance, a million dollar life insurance policy may actually be a good choice – and you should take that into account.

To determine if you need such protection, you will need to sit down and review your current and projected debts and expenses for the next several decades. But it can be time well spent in the unlikely event that you are no longer around to take care of your family financially.

Find out if you need a million dollar life insurance policy

Financial experts suggest that you buy a life insurance policy worth 5 to 15 times your annual income. So if you are earning $ 100,000 per year, a million dollar policy makes sense. You might also need such coverage if you are making less money but have large debts that will need to be paid off. For example, if you have five children who are likely to go to college, you might need more than if you had only one child.

Other large debts, such as school loans, a large mortgage, or a business loan, will also come into play when determining the amount of life insurance you need. The same goes if you have a partner or a disabled child 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 is worth the value of their work around the house: how much would it cost to hire someone to cook and clean, for example, if that person weren’t there. not here?

Eligibility criteria

Not everyone qualifies 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. Insurers may also consider other factors, including the following:

  • Your age. A 30-year-old with young children will likely need more coverage than a 65-year-old and retired. In the latter case, the person’s children are likely adults and alone, without the need for support.
  • Your income. If you are new to the workforce and earn $ 30,000, you are unlikely to be approved for a million dollar policy. In this case, you may only need $ 300,000 to $ 500,000 in coverage to make sure your loved ones are covered.
  • Your health. It is easier to qualify for life insurance when you are in good health. If you have a chronic illness, you may be turned down or the insurer may come back with a counter offer for less coverage than you requested. You will also get a better premium rate if you are a non-smoker.
  • If you have other life insurance. If you buy a second policy, the insurer will likely take the amount of coverage in your original policy into account when determining how much they will offer you for your policy.

Cost of a million dollar life insurance policy

You might imagine that you would have to pay a lot for a million dollar policy, but that isn’t necessarily true. If you’re young and healthy enough, a million dollar blanket might only cost $ 30-40 a month.

The other factor to consider is the length of time your policy is valid. For example, a 30 year term policy will cost more than a 10 year policy. You will also pay a little more if you are male than if you are female, as men are statistically more likely to die younger than women.

Here are some cost examples that will give you an idea of ​​what to expect for a healthy 35-year-old who does not smoke:

Monthly premiums for a million dollar life insurance policy
Policy term Man 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 is no limit on how your heirs can use your insurance policy payment. Any financial need, short or long term, is acceptable.

For starters, your policy may allow your beneficiaries to pay for funeral and burial costs. It can then be used for everyday expenses, or to pay off a mortgage, car loan, or school debt.

In the long run, your policy payment can allow your children to attend the college or university of their choice without incurring large college loans. If you are a business owner, your policy can allow your heirs or business partners to continue running the business smoothly, without any financial setbacks due to your death.

Frequently Asked Questions

What is the best life insurance company?

Because each person’s circumstances are unique, a life insurance company that is right for one person might not offer another the best rate. 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 research is our list of the best life insurance companies of 2021.

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 life of the policyholder as long as they continue to pay the premiums. Lifetime also includes a savings component, the content of which is accessible to the insured before his death.

How Much Life Insurance Do I Need?

It depends on what you expect your insurance to pay for, as well as factors such as your age, number of dependents, and income. To determine how much you need, list all of your debts, including mortgages, student loans, and consumer debt, and add the amount it would take to support your family. , which may include daily expenses and tuition.

What determines my life insurance premium?

There are several factors that go into determining your premium. The length of the policy and its payment benefits have an impact on your costs, as does your health, age and other personal information about you.

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Justin D. O'Neill