What does multi-million dollar life insurance really mean?

A million dollars seems like a lot of money, and for most of us it really is.

But when it comes to life insurance, is a million dollar life insurance policy enough? is it too much

Let’s take a look at what multi-million dollar life insurance really means for your financial security.

The basics of a million dollar life insurance policy

First, let’s start with a few basics. Life insurance is financial protection you give to your loved ones in the event of your death. Depending on the stage in your family’s life, you will need more or less coverage.

Take, for example, newlyweds in their early 20s with a baby on the way, and then compare them to a retired couple with grown children and substantial savings. If a spouse dies in any of these scenarios, the financial outcomes can be very different. The young couple may not have saved as much in the bank to support themselves as compared to the older couple.

In this example, the $1 million death benefit could be more than enough for the retired couple. However, the newlyweds may see the need for a higher death benefit as they assess their obligations as a young and growing household.

What must life insurance cover?

Common considerations to consider when making your decision include mortgage payments, car payments, student loans, personal loans, credit cards, and other debt. You should also consider daily living expenses and future expenses (such as tuition for the children and pension costs).

Depending on your circumstances, that big $1 million number can suddenly start shrinking.

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While $1 million might seem like a nice round amount when applying for life insurance, it makes sense to take a more strategic approach. Using a calculator to decide how much life insurance is appropriate for your situation will give you a better picture of how much money you’ll need to support loved ones when you die.

Who Can Get Million Dollar Life Insurance?

Let’s say you’ve decided that a million dollar life insurance policy is the right amount. Then you have to see if you can get one. The first question to ask yourself is, “Can I afford to maintain the monthly premiums on the policy?” When you buy life insurance, you pay a monthly premium to keep it in effect.

How much does a million dollar life insurance policy cost?

Typically, the premium for a million dollar policy starts at around $30 per month and then increases based on age and health status.

Here are some of the factors that affect the cost of the policy:

  • Age
  • Lifestyle factors (eg, skydiving or smoking)
  • Health
  • Gender (women tend to live longer than men)
  • Policy Type (Term vs. Permanent)

Term vs. Permanent for a million dollar policy

Buying a million dollar permanent life insurance policy has a significant price difference compared to a term policy of the same denomination. Term life insurance is cheaper because these policies have no accrued cash value and expire after a certain period of time (the “Term”).

For example, if you have a $1 million, 20-year policy, you pay your monthly premiums for 20 years, and if you don’t die during that time, your policy expires after 20 years without being worthless after that that. As mentioned earlier, you may have paid $40 a month for this policy.

On the other hand, you might pay hundreds a month for a million dollar permanent policy, but this policy, as the name suggests, will continuous. Holding it long enough also creates a cash value that you can access when you need it.

Do I have to take a medical examination?

Your next question might be, “What is the process of getting a policy?” The insurance company will only offer you life insurance if you are a reasonable risk to them. The way the insurance company determines this is through a process called underwriting. They will ask you health questions, conduct a medical exam, and/or obtain medical records from third-party sources.

No medical examination options

Some insurance companies advertise their insurance plans as “no medical exam required.” However, these are usually intended for policies with a face value of less than one million dollars.

Express policies with no checks can sometimes run as high as $300,000, but if you’re higher, you’ll need to do more research to determine if you want to be insured. You might even find a company or two offering up to $1 million without a medical exam. But even with these, the chances are good that you won’t get through the whole process without a follow-up examination.


Knowing what a million dollar life insurance policy means in today’s market and dollars is an important benchmark to understand. It’s a good starting point for making your own life insurance decisions. Then the next step is to delve deeper into your own needs and find the right insurance product for you.

Finally, if you are looking for help with this process, we recommend that you speak to an independent insurance agent. As a licensed professional, an agent can help you compare products and insurance companies so you can find the best fit for your situation.

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