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Do You Need a Million Dollar Life Insurance Policy?

Christy Bieber
By: Christy Bieber

Our Insurance Expert

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Life insurance coverage is designed to provide financial protection to loved ones, and a million dollar life insurance policy would provide a lot of protection. The policy would pay out a $1 million death benefit to chosen beneficiaries. But is this much coverage needed? Here's what consumers should know about buying a million dollar life insurance policy.

How does a million dollar life insurance policy work?

A million dollar life insurance policy comes with a death benefit equal to $1 million. Those who purchase life insurance have a choice of how large their death benefit will be. Policies may pay out as little as a few thousand dollars. Or they may pay $1 million or more.

Million dollar life insurance policies are available with both term life insurance coverage and whole life coverage, also known as permanent coverage. If a policy is a term policy, the $1 million would be paid only if the policyholder died during the coverage term. It provides a lot of protection for a limited time.

If it is a whole life policy, the coverage remains in effect indefinitely. As long as premiums are paid, the policy would remain in effect and the $1 million death benefit would go to chosen beneficiaries. This type of permanent insurance comes at a far higher cost than a term policy, especially since it has an investment component.

Can anyone get a million dollar life insurance policy?

Insurance is intended to allow surviving dependents to maintain their quality of life. It is not intended to make people wealthy.

As a result, some insurers will require financial justification to show that $1 million in coverage is needed. This could include proof of income. In many cases, it's possible to qualify for a policy that pays out a maximum of 20 to 30 times the policyholder's income.

Insurers also consider age and health status in determining whether to allow someone to buy a life insurance policy. This is especially true with such a large amount of coverage. Someone who is older or who has pre-existing conditions may not be able to buy a million dollar life insurance policy.

Do you need a million dollar life insurance policy?

To determine if a million dollar life insurance policy is needed, it's helpful to know the basics of life insurance. Specifically, the purpose of a policy is to replace income or services the policyholder would otherwise have provided.

Typically, it's a good idea to buy life insurance coverage that replaces 10 to 12 times the policyholder's annual income. So, someone with at least $100,000 of income might need a million dollar life insurance policy.

Some people may have different coverage needs. This could be the case if they have a substantial amount of debt or need to fund education for many children. A parent with a disabled child who will require lifelong care may also need more coverage. It can be helpful to consider personal circumstances when deciding if a million dollar life insurance policy makes sense.

How much does a million dollar life insurance policy cost?

The cost of a million dollar life insurance policy varies based on factors including:

  • Whether the policy provides term or whole life coverage
  • The age of the policyholder at the time of purchase
  • The insurance company chosen
  • The policyholder's health status at the time of purchase
  • The length of the term of coverage

A million dollar life insurance policy may seem very expensive. But it isn't necessarily out of reach. It could cost as little as $35 per month or less to buy a term life policy with $1 million in coverage for a healthy 30-year-old, although permanent insurance would be much more expensive.

How to get a million dollar life insurance policy

To understand how to get a million dollar life insurance policy, consumers need to know how to buy life insurance with a high death benefit. Here are the steps to take.

Confirm whether $1 million in coverage is needed

Before shopping for a million dollar life insurance policy, it's smart to determine if so much coverage is needed. Consider the income replacement that is needed; any debts that must be paid off, including a mortgage; and how much it would cost to care for and educate any surviving children.

Find an insurer offering $1 million death benefits

The next step is to find an insurer that offers policies with a death benefit of $1 million or more. Most standard term and whole life insurers provide this level of coverage, but it's a good idea to look into different options.

In fact, consumers looking for $1 million in coverage should aim to get several different quotes online from a variety of insurers. Getting a life insurance quote from multiple insurers will help them to determine if this amount of coverage is available as well as how much a million dollar life insurance policy might cost.

Submit an application

After researching the best life insurance companies and getting several quotes, the next step is to apply for coverage with a chosen life insurance company. This will involve submitting a formal application with details about health status, age, and desired coverage amount.

Provide required financial credentials

If an insurer requires proof of income or other financial credentials, these will need to be provided. Tax returns or recent documents are some examples of proof of income an insurer may require.

Undergo a medical exam

In order to obtain a $1 million life insurance policy, a medical exam is typically required. The purpose of the exam is to determine if there are any pre-existing conditions or health problems that could affect eligibility for coverage.

Accept coverage and pay premiums

After reviewing financial credentials and health details, an insurer may decide to offer a $1 million life insurance policy. At this point, the policy purchaser should review the terms and determine if the coverage is affordable and sufficiently comprehensive.

If the policy terms are agreeable, the consumer can accept coverage and pay premiums. The policy will go into effect and $1 million in coverage will be available.


  • Premium prices for a million dollar life insurance policy vary depending on many factors, including the policyholder's age and health status. Whether the policy is term or whole life also matters, as term life policies will be far more affordable.

    In general, however, a million dollar life insurance policy may not cost as much as expected. In fact, a 30-year-old in good health could generally get a policy for around $35 per month or less.

  • Whether a million dollar life insurance policy makes financial sense or not depends on the policyholder's income and obligations. A good general rule of thumb is that a life insurance death benefit should equal around 10 to 12 times the policyholder's annual earnings. As a result, someone who earns $100,000 per year or more might need $1 million in coverage.

Our Insurance Expert