A million dollars in life insurance coverage might sound a bit excessive. After all, most of us don’t make a million dollars in a year or have that kind of money saved in a bank account. So you might be surprised to learn that a million dollar life insurance policy is actually a very reasonable amount of life insurance protection for many families.
For example, when considering an appropriate amount of life insurance coverage, most financial experts recommend that you start with your annual salary (before taxes) and multiply that number by a minimum of 10. That would give your loved ones at least ten years of your income in one lump sum payment, allowing them to maintain their same living standards and providing the time to plan for the future.
In addition to your salary, you will also want to factor in other expenses that your loved ones would need help with, such as the cost of your mortgage, college tuition expenses for children, and any other remaining debts.
As you can see from the example, it is very common for the average family to need a million dollars of life insurance coverage. Therefore, this article will focus on everything you need to know about obtaining a million dollar life insurance plan, from the different types of life insurance options to the underwriting requirements and even the potential cost of the coverage.
What is a Million Dollar Life Insurance Policy?
A life insurance policy is a contract between the insurance provider and the insured. In the simplest terms, the contract works with the insurance provider making the promise to pay a death benefit to the insured’s beneficiary should they pass away while the contract is active.
For the insurance contract to work, the insured must make their required premium payment for the life insurance coverage when due. Payment methods often include annual, semi-annual, quarterly, or monthly options.
So, for example, a one million dollar life insurance policy would have a death benefit equal to one million dollars. If the insured were to pass away while the contract is in active status, the insurance provider would payout a death benefit of exactly one million dollars to the individual or individuals named as a beneficiary of the life insurance contract.
In most cases, the death benefit proceeds received from a death claim payment are free from being taxed. Therefore, per the IRS, life insurance proceeds are not includable in gross income, and you are not required to report them.
A death benefit of one million dollars can replace lost income for many years, pay final expenses, and help provide for future financial obligations. They can be a great way to help your family pay the mortgage, pay college tuition, and continue to maintain a sense of normalcy. In addition, it can provide financial protection while helping your surviving spouse manage your family’s regular living expenses.
Common Types of Million Dollar Life Insurance Plans
Life insurance plans can be broken down into two categories consisting of temporary and permanent contracts. Within those two categories are different types of life insurance options, such as:
- Term life insurance
- Universal life insurance
- Whole life insurance
Each of the three types of life insurance can offer a million dollars of life insurance protection. Here is how each of the three life insurance options works to help you better decide which plan will be best for you and your family.
Term Life Insurance
Term life insurance is temporary coverage. This type of life insurance is incredibly popular because of its affordability, especially for those requiring more significant amounts of death benefit protection, such as a million dollars.
What makes term life insurance so much more affordable than any other type of life insurance coverage is that the insurance coverage is based on temporary contract lengths of 10, 20, or 30 years.
When you choose a contract length, your premiums and death benefit are locked in for the entire contract duration. Once the contract comes to an end, the coverage is over. Since most policyholders are likely to outlive their policy contract, insurance companies price the coverage at a much lower cost than permanent life insurance options.
By having multiple contract lengths to choose from, term life insurance policies give families the flexibility to purchase coverage for only the amount of time it’s needed the most.
For example, let’s say you purchase a one million dollar term life policy with a contract length of 30 years when you are 35 and have young children at home. When your term life insurance policy ends, you will be 65. At that time of your life, your children might be financially independent and living on their own. You may even be retired or close to retirement and have your mortgage ultimately paid off.
At this point, you’ll likely no longer need a million dollars in coverage. This can allow you to take out a much smaller term life insurance policy or a smaller permanent plan to cover final expenses.
$1,000,000 Term Life Insurance Rate Chart
Average monthly costs for 10, 20, and 30-year $1 million term life insurance policy by age and gender. The rates in the table below are based on the best possible health classification of Preferred Plus, non-tobacco use in the past five years or longer.
| Age | Gender | $1 Mil / 10-Year Rates | $1 Mil / 20-Year Rates | $1 Mil / 30-Year Rates |
|---|---|---|---|---|
| Age 30 | Male | $17.85 / monthly | $29.75 / monthly | $51.80 / monthly |
| Age 30 | Female | $15.30 / monthly | $23.79 / monthly | $39.91 / monthly |
| Age 35 | Male | $19.55 / monthly | $33.14 / monthly | $63.24 / monthly |
| Age 35 | Female | $16.14 / monthly | $28.89 / monthly | $51.13 / monthly |
| Age 40 | Male | $26.35 / monthy | $49.06 / monthly | $92.48 / monthly |
| Age 40 | Female | $23.80 / monthly | $40.80 / monthly | $73.09 / monthly |
| Age 45 | Male | $45.35 / monthly | $85.84 / monthly | $146.93 / monthly |
| Age 45 | Female | $37.37 / monthly | $66.29 / monthly | $114.00 / monthly |
| Age 50 | Male | $68.15 / monthly | $130.67 / monthly | $242.09 / monthly |
| Age 50 | Female | $56.94 / monthly | $96.04 / monthly | $179.43 / monthly |
| Age 55 | Male | $121.23 / monthly | $218.43 / monthly | $456.43 / monthly |
| Age 55 | Female | $90.09 / monthly | $158.06 / monthly | $329.76 / monthly |
| Age 60 | Male | $206.81 / monthly | $383.28 / monthly | NA |
| Age 60 | Female | $136.03 / monthly | $265.68 / monthly | NA |
| Age 65 | Male | $357.82 / monthly | $743.09 / monthy | NA |
| Age 65 | Female | $223.26 / monthly | $485.18 / monthly | NA |
Monthly male/female non-tobacco premium rates current as of 8/24/2022 representing the cost of a $1,000,000 term life insurance policy. Be sure to click the instant quote button to check rates for additional risk classifications.
Guaranteed Universal Life Insurance
Guaranteed universal life insurance, or GUL for short, is a newer form of permanent life insurance coverage that works similarly to term insurance. Rather than choosing from multiple contract lengths, guaranteed universal life insurance typically lasts to age 120. In addition, throughout the contract, the premium and death benefit is guaranteed to remain the same.
Regarding cost, guaranteed universal life insurance falls right in the middle of the cost of a term policy and a whole life insurance policy. For example, purchasing a million dollar guaranteed universal life insurance policy will cost more than term insurance because the coverage is permanent but cheaper than a whole life insurance policy because of the lack of cash value growth. This is because guaranteed universal life accumulates nearly zero cash value growth.
Guaranteed universal life insurance can be an excellent buy if you’re looking for an affordable million dollar permanent life insurance plan at a reasonable cost. Just keep in mind that this is a permanent plan without cash value potential.
In addition, several providers even offer these plans with a return of premium feature that allows you to surrender your coverage should your coverage needs change later in life for a full refund of all premium payments.
- Recommended Reading:
- 2022 Best Guaranteed Universal Life Insurance Providers
$1,000,000 Guaranteed Universal Life Insurance Rate Chart
Average monthly costs for a $1 million guaranteed universal life insurance policy by age and gender. The rates in the table below are based on the best possible health classification of Preferred Plus, non-tobacco use in the past five years or longer.
| Age | Gender | $1 Mil / GUL Rates |
|---|---|---|
| Age 30 | Male | $315.05 / monthly |
| Age 30 | Female | $268.46 / monthly |
| Age 35 | Male | $393.62 / monthly |
| Age 35 | Female | $341.06 / monthly |
| Age 40 | Male | $500.00 / monthy |
| Age 40 | Female | $427.00 / monthly |
| Age 45 | Male | $609.00 / monthly |
| Age 45 | Female | $525.00 / monthly |
| Age 50 | Male | $777.00 / monthly |
| Age 50 | Female | $688.00 / monthly |
| Age 55 | Male | $997.00 / monthly |
| Age 55 | Female | $886.00 / monthly |
| Age 60 | Male | $1,309.00 / monthly |
| Age 60 | Female | $1,111.00 / monthly |
| Age 65 | Male | $1,761.00 / monthly |
| Age 65 | Female | $1,466.00 / monthly |
Monthly male/female non-tobacco premium rates current as of 8/24/2022 representing the cost of a $1,000,000 guaranteed universal life insurance policy. Be sure to click the instant quote button to check rates for additional risk classifications.
Whole Life Insurance
Whole life insurance is one of the oldest and most popular forms of life insurance coverage. With this type of life insurance plan, you will receive several guarantees, such as a fixed premium, death benefit, cash value growth, and permanent lifetime protection. However, whole life insurance comes at a much higher cost than other life insurance options.
For example, when reviewing the rate tables for the different $1 million dollar policies, a whole life insurance policy can cost upwards of 45x the amount of a 10-year policy. Such a significant cost difference often makes whole life insurance plans out of financial reach for the average family.
A large portion of what makes whole life insurance so costly is the lifetime protection the coverage provides and the guaranteed cash value growth. A whole life insurance policy requires a higher premium to build the cash value account.
The coverage is similar to a forced savings account. The insurance company deposits a pre-determined amount into the cash account with each premium payment. Eventually, the cash value of a whole life insurance policy should equal the death benefit of the life insurance policy when the contract has reached maturity, which is generally at age 120.
- Recommended Reading:
- 2022 Best Whole Life Insurance Providers
$1,000,000 Whole Life Insurance Rate Chart
Average monthly costs for a $1 million whole life insurance policy by age and gender. The rates in the table below are based on the best possible health classification of Preferred Plus, non-tobacco use in the past five years or longer.
| Age | Gender | $1 Mil / Whole Life Rates |
|---|---|---|
| Age 30 | Male | $868.63 / monthly |
| Age 30 | Female | $801.27 / monthly |
| Age 35 | Male | $1,026.56 / monthly |
| Age 35 | Female | $947.43 / monthly |
| Age 40 | Male | $1,217.11 / monthy |
| Age 40 | Female | $1,113.25 / monthly |
| Age 45 | Male | $1,448.86 / monthly |
| Age 45 | Female | $1,315.82 / monthly |
| Age 50 | Male | $1,762.15 / monthly |
| Age 50 | Female | $1,613.66 / monthly |
| Age 55 | Male | $2,183.59 / monthly |
| Age 55 | Female | $2,001.63 / monthly |
| Age 60 | Male | $2,790.43 / monthly |
| Age 60 | Female | $2,544.95 / monthly |
| Age 65 | Male | $3,628.16 / monthly |
| Age 65 | Female | $3,288.26 / monthly |
Monthly male/female non-tobacco premium rates current as of 8/24/2022 representing the cost of a $1,000,000 whole life insurance policy. Be sure to click the instant quote button to check rates for additional risk classifications.
How to Know If You Need a Million Dollar Life Insurance Policy
$1,000,000 of life insurance coverage may sound like much more than you need, but a policy of that size is not just for high-income families. For example, The United States Bureau of Labor Statistics reports that the average salary in America in 2021 was $58,260.
So, let’s say you make $58,000 a year with your occupation. As mentioned at the beginning of the article, it’s common financial advice that if you are still in your working years and have dependents that are reliant on your income, your life insurance policy should be at least 10x your annual salary. So your starting point would be $580,000.
Now, let’s say that you still owe $250,000 on your mortgage, and you want to include that debt in your policy. Let’s also assume you have two children and would like to cover four years of college for each of them. The current average cost for a four-year college education is $122,000.
Using the numbers in the example, you’d need at least:
- Ten years of income replacement: $580,000
- Mortgage balance payoff: $250,000
- Four years of college for two children: $244,000
- Total life insurance required: $1,074,000
As you can see, a million dollar policy might be a great fit in this scenario, especially if you want to set aside any additional funds for medical expenses and other debts.
- Recommended Reading:
- How to Determine Life Insurance Coverage Amount
Additional Life Insurance Needs That May Require a Million Dollar Life Insurance Policy
There are a variety of times a million dollar life insurance policy might be a good idea. How much life insurance coverage your family needs depends on your circumstances and financial situation. The bullet points below focus on additional life factors that may add to the overall reason you need a million dollars worth of life insurance coverage.
- You earn over $100,000
- You and your spouse together earn over $100,000
- You have a substantial amount left to pay on your mortgage
- You have a substantial amount left to pay on your student loans
- You have substantial credit card debt
- You care for a dependent relative in your home
- You cover the cost of assisted living or nursing care for a relative
- You have a child with special needs
- Estate planning and inheritance taxes
Can Anyone Get a Million Dollar Life Insurance Policy?
Not everyone can purchase or qualify for a million dollar life insurance policy. However, when applying for life insurance coverage, every insurance company and its underwriters will check to see that the total amount of coverage you request is reasonable and makes sense for your income and circumstances.
Each company has its own set of underwriting rules and guidelines, and there are caps on the amount of insurance you can buy in correlation to your age and income. So, for example, you won’t be allowed to purchase an overly large policy if your income doesn’t meet the financial justification for the death benefit amount.
For example, as an underwriting rule, companies will cap an applicant who is 40 at about 30x their yearly income but will cap someone who is 70 at about 10x their yearly income. This cap is known as an income replacement limits and looks similar to the following table:
| Income Replacement Table | |
|---|---|
| Age | Maximum Multiplier |
| 40 and younger | x30 |
| 41-50 | x25 |
| 51-55 | x20 |
| 56-65 | x15 |
| 66-70 | x10 |
| 71+ | x5 |
Understanding Your Insurability Limit
So how do income replacement guidelines factor into buying a million dollar policy? Generally, it means your income will have to meet this rule. So, if you’re 40 and applying for a million-dollar policy, you’ll need an annual income of around $30,000 or more. If you’re 60, you’ll need a yearly income of about $70,000.
In some cases, an insurance company will work with you if your income is close to the limit. For instance, an insurance company might approve your policy if you were 40 with an income of $25,000 and could provide additional financial documentation or a strong justification for needing one million dollars in coverage.
No insurance company will approve a policy that is well above your limit. This is a measure is to prevent fraud. Remember that life insurance policies are meant to replace income if you pass away. They’re not meant to increase your family’s income.
Life insurance companies understand and expect that you need to include expenses such as debt, your children’s educational costs, and final expenses in your benefit amount. Younger people are provided with a larger multiplier of income as insurance companies understand that for those individuals, the need for life insurance coverage is often at the highest.
However, coverage amounts beyond your income will likely not be approved without reasonable justification.
How are Life Insurance Rates Determined When Applying for a $1 Million Dollar Life Insurance Policy?
A million dollar life insurance policy might sound like it will be an expensive amount of life insurance coverage. However, policies with this high benefit amount can be surprisingly affordable. Of course, your cost will depend on multiple factors starting with the type of policy you choose.
For instance, take term insurance, for example. A term life insurance policy will be the least expensive life insurance option, with shorter contract lengths being the cheapest. Conversely, longer contract durations will increase the cost but will still cost significantly less than a permanent life insurance plan such as universal life or whole life insurance.
When choosing a type of life insurance plan, selecting a contract length that offers the cheapest rates can be tempting. However, this is rarely a good idea. It’s essential always to select the type of coverage that will provide you and your family with the protection for the amount of time needed.
Any time that you are less of a risk of the insurance company having to pay on a death claim, the rates for coverage will be much cheaper.
- Additional factors that go into determing life insurance rates:
- Health - Your health is one of the most significant factors regarding how much you'll pay or if you will even qualify for life insurance coverage. Underwriters can assess an applicant's health by reviewing health questions within the application for coverage, a medical exam, and third-party consumer reports.
- Age - It's always cheaper to buy life insurance and lock in your rates when you're young and healthy. Life insurance prices go up as you age as mortality reduces.
- Height/Weight - Your Body Mass Index (BMI) is a measure of your weight relative to your height. The insurance company will use your BMI as an indication of your health. Applicants whose BMI indicates that they are underweight weight, very overweight, or obese will pay a higher rate for life insurance.
- Driving Record - All life insurance companies check your driving record when you apply. Multiple marks on your record for speeding, DUIs, and other risky driving behaviors could raise your rates or cause your application to be denied.
- Criminal Record - Most insurance companies won't issue policies to people who are currently incarcerated or who have had a felony charge within the past five years.
- Financial Record - Getting a life insurance policy can be difficult if you have a recent bankruptcy. Some insurance companies will charge higher rates to people with poor credit scores.
- Hobbies - High-risk hobbies such as skydiving, mountain climbing, snowboarding, and dirt bike racing can raise your life insurance rates and make it hard to secure a million-dollar policy.
- Occupation - People with certain professions are considered high risk and might have trouble securing life insurance coverage. This includes firefighters, loggers, oil rig workers, and coal miners.
Rate Classifications and the Cost of a Million Dollar Life Insurance Policy
All the factors the life insurance company finds in underwriting are used to assign to a life insurance rate class. Your life insurance rate class is based on the level of risk of assigning you a life insurance policy.
- Rates classifications include:
- Preferred Plus - This is the highest rate class for applicants in the best health. People in this class pay the lowest rates.
- Preferred - People in this class also qualify for great rates, and this class has a little more flexibility in underwriting standards than the preferred select class.
- Standard Plus - This rate class is for people with well-controlled health conditions. Rates are generally still very affordable at this level.
- Standard - This is for people in average health. People in this class pay the life insurance company's standard rates.
- Preferred Tobacco - Most insurance companies assign active smokes to different rate classes than non-smokers. This class is for smokers who are otherwise in good health.
- Standard Tobacco - Smokers in average health are likely to be assigned this rate class.
- Substandard - This class is for people in below-average health. It might be difficult to get a policy at all at this level.
It’s best to be in at least the standard rate class or better if you’re looking into buying a million-dollar policy. Then, you’ll be able to get an affordable policy with a locked-in rate.
You can read more about each rate class in our rate classification guide.
Will a Million Dollar Life Insurance Policy Require a Medical Exam?
A medical exam is a standard part of any life insurance application process, especially when it involves considerable amounts of life insurance coverage.
However, several companies still offer the chance to get one million dollars in coverage without a medical exam. These companies use an accelerated underwriting process instead of medical exams. They rely on the information you provide on your application and verify it using third-party consumer databases like LexisNexis.
With the help of technology, life insurance underwriters can quickly access these consumer databases to review information on your driving history, prescribed medications, and any past insurance applications to evaluate your level of risk.
You will need to answer medical questions, and you can be turned down for these policies for no medical exam underwriting. Additionally, many life insurance companies that offer million-dollar no exam policies have underwriting flags that can trigger the need for a medical exam to proceed with the underwriting process.
Knowing the exact rules and limits on million dollar no exam policies offered by the insurance company you’re applying with is a good idea. For instance, some companies will only allow customers under a certain age (generally age 60 or younger) to apply without an exam.
Best $1,000,000 No Medical Exam Life Insurance Providers
Several life insurance providers could easily be classified as the “best.” However, we are a firm believer that there is no single life insurance company that will be the best one for everyone. This is because of how competitive companies are in different areas.
For example, you may have a company that offers the best rates for 40 year olds and another company that provides the best rates for 50 year olds. Let’s not forget about underwriting as a competitive feature as well. Again you may have one company that offers excellent rates for those with a history of diabetes but is awful for people with high cholesterol.
This also brings us to policy features such as no medical exam underwriting. As mentioned, with the use of technology and the ability to obtain data nearly instantly, several companies offer the option to qualify for life insurance with the strong possibility of skipping the medical exam.
While we don’t think there is any one company that is the best, we have put together a solid list of a few of the best life insurance providers that we often work with when we have clients that would like a million dollar life insurance policy without having to take a medical exam.
| Insurance Co | AM Best Rating | Max Non-Med Coverage Amount | Max Non-Med Issue Ages |
|---|---|---|---|
| AIG | A | Up to $1,000,000 | Ages 20-59 |
| ANICO | A | Up to $1,000,000 | Ages 18-50 |
| Banner | A+ | Up to $2,000,000 | Ages 20-50 |
| Cincinnati Life | A+ | Up to $1,000,000 | Ages 18-50 |
| Ethos | A+ | Up to $2,000,000 | Ages 20-50 |
| Foresters | A | Up to $1,000,000 | Ages 18-55 |
| Haven Life | A++ | Up to $1,000,000 | Ages 20-59 |
| Lincoln Financial | A+ | Up to $2,500,000 | Ages 18-60 |
| MassMutual | A++ | Up to $1,000,000 | Ages 18-60 |
| North American | A+ | Up to $2,000,000 | Ages 18-50 |
| Pacific Life | A+ | Up to $3,000,000 | Ages 18-70 |
| Principal | A | Up to $3,000,000 | Ages 18-60 |
| Protective Life | A+ | Up to $1,000,000 | Ages 18-60 |
| Prudential | A+ | Up to $3,000,000 | Ages 18-60 |
| Securian Financial | A+ | Up to $3,000,000 | Ages 18-60 |
| Symetra | A | Up to $2,000,000 | Ages 18-60 |
| Transamerica | A+ | Up to $2,000,000 | Ages 18-70 |
- Recommended Reading:
- Strong Life Insurance Companies in 2022
How to Purchase a 1 Million Dollar Life Insurance Policy
Your first step to purchasing your one million dollar policy is to start by getting comparison quotes from multiple companies. It’s always a great idea to use online broker sites to familiarize yourself with the possible rates for a million dollar life policy. You can use these sites to get instant life insurance quotes from multiple companies simultaneously rather than reaching out to each provider.
When comparing life insurance rates online, browse rates for the different coverage options but most importantly, check the rates for each potential risk classification. For example, if you believe you are in excellent health and may qualify for the preferred plus class, it’s still a good idea to check the preferred and even the standard classes in case you do not qualify for the rate classification you have applied for.
Online quotes should not require any obligation to complete an application. It allows you to shop for the best rates at your leisure. However, when you have found a company that offers the best rate and product features, you can often request an application and connect with an agent to begin the application process.
If you’d prefer to have help in buying a policy, consider talking to a life insurance agent. Life insurance agents can help you find the right life insurance company and policy for you. They’re experts who can match you with a life insurance policy suited to the coverage amount you need and any specific concerns you might have. Plus, since life insurance agents are paid in commissions, it won’t cost you anything to use their service.
Final Thought
You can get one million dollars in coverage at an affordable rate, especially if you’re young and healthy. If you select a no-exam life insurance company, you can get a million-dollar policy from the comfort of your living room.
We work with the top no medical exam companies at No Medical Exam Quotes. We can help you get started today. Then, when you’re ready, you can use our quick form to see your life insurance quotes for a million-dollar term life policy without a medical exam.
