Million Dollar Life Insurance: How Much It Costs & Who Needs One – Policygenius (2024)

A $1 million life insurance policy might seem like too much coverage at first, but once you account for long-term costs like raising children and paying off a mortgage, you may discover your loved ones would need that much financial support in the event of your death, if not more.

A $1 million life insurance policy is more affordable than you might think, especially if you’re young and in good health.

How much does million-dollar life insurance cost?

The longer your term life insurance policy is, the higher your premiums will be. Your premium is how much you pay for your coverage — usually on a monthly or annual basis.

A 30-year-old non-smoking male in good health can expect to pay $31 per month for a $1 million term life insurance policy with a 10-year term, or $48 for a 20-year term. That same adult would pay $71 for a policy with the same coverage amount with a 30-year term.

Average monthly rates for a $1 million term life policy

Methodology: Average monthly rates are calculated for male and female non-smokers in a Preferred health classification obtaining 10-year, 20-year, and 30-year $1 million life insurance policies. Life insurance averages are based on a composite of policies offered by Policygenius from Legal & General America, Brighthouse Financial, Corebridge Financial, Foresters Financial, Lincoln Financial, Mutual of Omaha, Pacific Life, Protective, Prudential, Symetra, and Transamerica and the Policygenius Life Insurance Price Index, which uses real-time data from leading life insurance companies. Rates may vary by insurer, term, coverage amount, health class, and state. Not all policies available in all states. Rate illustration valid as of 04/01/2024.

Learn more about term life insurance rates

Sample monthly rates for a $1 million whole life insurance policy

Whole life insurance doesn’t expire, so it’s significantly more expensive than term life, and the amount of coverage you choose will be a key factor in the cost of the policy. A 30-year-old non-smoking male in good health can expect to pay around $954 per month for a $1 million whole life insurance policy.

Methodology: Approximate monthly rates are calculated for non-smokers in a Preferred health classification, obtaining a $1 million whole life insurance policy paid up at age 100 offered by Policygenius through MassMutual. Rates may vary by insurer, coverage amount, health class, and state. Not all policies available in all states. Rate illustration valid as of 04/01/2024.

Learn more about whole life insurance rates

What factors influence the cost of a $1 million life insurance policy?

Life insurance companies determine how much you’ll pay for your policy based on your application and health history. Below are a few of the main factors they consider.

• Your age. The younger you are, the less you’ll have to pay for life insurance because we all become riskier to insure as we age. The average cost of life insurance increases by 4.5% to 9% every year you delay buying a policy.

• Your gender. On average, men pay 24% more for life insurance than women. Men have a shorter life expectancy than women, so insurers consider them riskier to insure. [1]

• Your health. Generally, the fewer health conditions you have, the lower the chances that you die while the policy is active will be. This means that the healthier you are, the lower your rates will be.

• Lifestyle activities. Lifestyle activities that increase your risk of dying can raise your rates — whether that’s smoking or skydiving.

Who needs a million-dollar life insurance policy?

Anyone who’s making $100,000 or more per year or has multiple people depending on their income likely needs a million-dollar policy.

Some common categories of people who could need this kind of coverage include:

• Parents and future parents

• Spouses with shared debt, like a mortgage and car loans

• Business owners

Many financial advisors recommend buying coverage that’s 10 to 15 times your annual income. The best way to determine whether you need that much coverage is to calculate your current expenses and future financial obligations.

For example, say you:

• Make $100,000 per year

• Have $200,000 remaining on your mortgage, and

• Plan to have a child before your policy expires

To cover your remaining mortgage and the cost of raising a child to age 18 (approximately $310,605, according to the Brookings Institution and data from the U.S. Department of Agriculture), [2] your loved ones would need over $500,000.

If you’d like to leave them enough on top of that to replicate just five years of your $100,000 salary, you would need another $500,000.

In total, you’d need at least $1 million in coverage. If you have additional debt, expect your salary to increase, or want to cover the cost of your future children’s college educations, you might need coverage closer to a $2 million life insurance policy.

Who can buy a $1 million life insurance policy?

As long as your income, assets, and liabilities justify the coverage, you usually won’t have any problems buying a million-dollar policy. When you apply for life insurance, insurers want to make sure you get approved for a coverage amount you can afford.

They’ll look into factors like your age, income, net worth, overall financial stability, and any life insurance coverage you may already have to determine the payout amount they think is appropriate for your situation.

Age & income

Each insurer sets a maximum amount of coverage people in each age group can purchase. Here are common ranges based on Policygenius’ partner insurance companies:

• Under age 40: 25 to 30 times your yearly income

• Ages 40 to 60: 10 to 25 times your yearly income

• Ages 60 to 70: 5 to 10 times your yearly income

Based on these ranges, you’d need to make at least $34,000 under age 40 to qualify for a million-dollar policy. By the time you reach age 60, you’d need to make$100,000 to $200,000 to qualify.

This is because when you’re young, you have more working years ahead of you and higher potential for financial growth. As you get older, you’re closer to retirement and likely have fewer financial responsibilities, so you need less coverage.

Read more about the best life insurance for seniors

Net worth

Let’s say you’re a retiree in your 60s with a high net worth, who earns $30,000 in yearly dividends.

• You might need $300,000 in coverage, but an insurer could approve you for more coverage based on your total assets.

• The insurer will view you as low-risk from a financial standpoint because you’ll be able to maintain your premium payments.

Existing life insurance coverage

If you already have some life insurance and apply for another policy, your existing coverage counts toward your total coverage limit.

• For example, let’s say you qualify for a $1 million policy based on your income and you submit an application for that coverage amount.

• If you already have an active life insurance policy worth $500,000, the insurer may only approve $500,000 in additional coverage.

• The company will count your existing coverage toward your maximum approved coverage amount.

If you’re unsure about how much life insurance you need, we can help.

• Use our calculator to get a sense of how much coverage is right for you.

• Then connect with a Policygenius agent to discuss your options and get started on your application.

At Policygenius, our experts are licensed in all 50 states and can walk you through the entire life insurance buying process while offering transparent, unbiased advice.

Learn more about the best life insurance companies