Million Dollar Life Insurance: Who Needs It? How Much Does It Cost?
Fancy a million dollar life insurance policy? Who doesn’t!
In fact, if you’ve been considering it, there’s no good reason not to go ahead and gain additional information.
However, does everyone really need to think this big? When purchasing a life insurance policy, it’s important to find the right balance.
On one hand, you don’t want your family to be left underinsured. On the other, allocating too much from your budget to life insurance may prove difficult.
So, what makes a good life insurance plan? How much money will your family need to guard against any shortcomings?
The answer to this question is what determines whether you actually need a million dollar life insurance policy.
Many people may need a million dollar life insurance policy if your annual salary amounts to at least $100,000.
You can also use SBLI’s Life Insurance calculator to determine an estimate of how much coverage you need.
Who Is Eligible for a Million Dollar Life Insurance Policy?
Let’s first look at who can qualify for a life insurance policy with a million dollar death benefit. The majority of insurance companies offer policies up to 10 to 30 times your annual salary. Based on your age, some variations may apply. Generally with life insurance policies, the younger the insured is, the higher the coverage eligibility is, in that case.
In many cases, young people can qualify for a million dollar life insurance policy if they’re employed and have a salary that fits the ratio.
Still, if you earn, say $30,000 a year, a million dollar life insurance policy might really be excessive. There’s no reason to pay expensive premiums if you don’t need that amount, after all.
Insurance agents are available to guide you through the entire process so that you can choose the right policy for you. In addition, you can find online life insurance calculators to help estimate your policy. The key is in properly assessing your family’s needs before purchasing a life insurance policy.
Get the Coverage Right
Let’s see how this looks in a hypothetical situation. As mentioned above, the coverage should be anywhere between 5 and 10 times your salary, but there are a number of factors that should be factored in this calculation.
- Health care costs for you and your family
- Funeral expenses
- Mortgages
- Dependents’ expenses
- Your children’s education
- Any other present or future significant debts
- Assets (if any)
- Daily costs of living after retirement
Other items may also come to mind, depending on each person’s specific situation.
Choosing the Right Policy Term Length
In addition to your age, health and salary range, policy rates are also impacted by the term length of the policy of your choice. E.g., a 30-year term will cost you more than a 20- or a 10-year term.
Many people have difficulties deciding on the policy term length. It is difficult to calculate how much money their family may need in the next three decades. Keep in mind that the policy coverage will not expire after the level-pay period, the level premium periods end after the selected term length.
Due to that, longer term policies cost more, but can be considerably less expensive than it would be to renew after 10, 20 or 30 years.
How Much Does a Million Dollar Life Insurance Policy Cost?
There are many factors affecting premiums, including policy term, age and health. It’s helpful to do your research and compare life insurance quotes from different companies.
However, you may be surprised to see just how affordable a million dollar life insurance policy could be with SBLI.
Keep in mind, 30-year term policies cost more. Shorter term length, such as a 10-year or 20-year policy, will be less expensive.
Conclusion
So, do you need a million dollar life insurance policy? The bottom line is that it depends on your individual circumstances and objectives.
It’s helpful to evaluate what your family would need annually and what outstanding debts you have in order to determine which policy is right for you.
When deciding on the right policy, ask your agent for guidance on what is the best policy for you. A perfect policy for one person may not be a good choice for another with similar earnings. After all, everyone has their unique circumstances when it comes to buying a life insurance policy.
Check on your options with a trusted source, and find the best policy today!
This is designed to provide general information on the subjects covered. The Savings Bank Mutual Life Insurance Company of Massachusetts. Woburn, MA. © 2021 All rights reserved. NAIC #70435.
Policy form B-56 series. 21-1020