A million dollar life insurance policy may seem like a lot of money, and it is…but the reality is that it takes a lot of money to raise a family these days, especially if you have a young family! How much life insurance should you get?
Think about what would happen to your family if you died early? Your surviving family members may need to provide for themselves for many years to come. Living expenses, housing, college, retirement and countless other expenses that will occur over the course of time.
What is a million dollar life insurance policy?
A $1 million dollar insurance policy is a contract between the owner of the insurance policy and the life insurance company. If the insured dies while the policy is active, the beneficiaries would receive $1,000,000 from the life insurance company. The owner of the policy may dictate how the proceeds of the life insurance policy are paid out in the form of a lump sum, or a series of periodic payments to the beneficiary.
Should you buy a million dollar term life insurance policy or permanent life insurance?
Term life insurance will typically be the least expensive for young families, offering term lengths of 1,5,10,15,20,25 and 30 year term lengths. The term length simply indicates how many years the premium you pay will be level and not change. At the end of the level term period, the life insurance is still available but the premium you pay will increase substantially.
Permanent life insurance such as whole life insurance or universal life insurance offer policies with the potential for cash value accumulation, lifetime guarantees, and benefit riders that may appeal to you. Premiums for permanent life insurance will typically charge 4-5 times more than a term life insurance premium.
Life Insurance Tip – Most term life insurance policies offer a conversion privilege that allows you to exchange some or all of your term life policy for a permanent life insurance policy, without having to go through medical underwriting again.
You also have the ability to purchase a combination of term life and permanent life insurance if that appeals to you.
Million Dollar Life Insurance Policy Incentives:
It’s no secret that life insurance companies want you to buy more coverage. Many people are under insured, but there has to be a balance between benefits received vs. fitting budgetary needs.
As an incentive to purchase more life insurance, most life insurance companies offer better pricing as the size of the policy increases. It’s called banding, and the general rule is that the cost per thousand decreases at the $250,000, $500,000, $750,000 and $1,000,000 coverage amounts.
Other options to help you balance budget vs insurance needs include looking at options such as staggered coverage where you have different term lengths involved, and death benefit payout options with some companies that may reduce your out of pocket expenses now in return for having the death benefit paid out over time rather than in a lump sum.
Even if you bought life insurance in the past and are just looking to supplement with some additional coverage. It always makes sense to revisit your entire life insurance portfolio, obtain new quotes, and then make decisions about how to proceed with new coverage. We’re here to help you.
Get your million dollar life insurance quote today. Thank you.