When you start to assess your life insurance needs, you will quickly find that the amount of insurance you need to allow your family to live comfortably and payoff debts will be higher than you originally assumed. Between the money you need to provide the family with to meet immediate obligations and the future income your family will need to sustain the household, you may need a million dollar life insurance policy.

After assessing how much you need to cover final expenses, outstanding debts, your outstanding mortgage, college funding for your kids, income replacement, and estate taxes, you then need to determine which type of term life insurance policy is right for you. With so many different term insurance policies to choose from, comparing all of your options is extremely important.

What Million Dollar Life Insurance Term is Best For You?

A million dollar life insurance policy provides your beneficiaries with $1,000,000 tax free payout in the event of your death. It is important for people with high net worth to have adequate coverage. Not only for final expenses,outstanding debts, and future financial obligations, but also if you’re leaving your family assets they will need to pay the estate taxes on their inheritance. A great way to preserve your estate is to purchase enough life insurance that will act as a tax free way for your beneficiaires to pay taxes. You should be aware that due to enactment of the Tax Cuts and Jobs Act in 2018, the current estate tax exepmtion is quite large. For example, if your wordlwide estate upo passing is less than $11.2 million, your inheritors will not be liable for any estate tax. This exemption; however, is temporary and it is important to keep this in mind. It is almost a guarantee that taxes will change in the future, but life insurance proceeds will almost certainly continue to be tax free in perpetuity. As a result, it is prudent to budget some allowance in your life insurance calculation for tax liabilities.

Given that a million dollar life insurance poilicy will pay a sum total of $1 million dollars without any tax liability, this equates to almost $1.4 million dollars in gross earnings assuming a tax rate of 40 percent. Viewed another way, if you purchase this amount of coverage you are leaving your family with the salary of a person earning $100,000 for 14 years. Many Americans find that this is a good balance between leaving their family peace of mind and not being too expensive to pay the premiums on throghout your life.

Now that you have determined the face amount you want to purchase, you need to move on to selecting the best term. What makes term life insurance unique is that it provides temporary coverage for a “term” or a specified period of time. While some individuals only need insurance for a short period of time, others need protection long-term. It is important to sit down and determine how long you will have a need for a million dollar life insurance policy before you start the quoting or application process.

What Million Dollar Life Insurance Terms Are Available?

The best place to start when you are trying to decide which term is best for you is to review what terms are immediately available. It is important to understand how the term you select affects the rates you will pay. When you invest in a short-term policy that is active for only a year, the premiums will be significantly lower than the premiums charged for longer terms. This is because the insurer will only guarantee your premiums will stay level for one to five years.

Longer terms are associated with higher premiums because the insurance company is on the hook long-term and the risk is higher for a claims payout. While the annual premiums are higher for long-term policies, applicants do not have to worry about their premiums being raised 1, 5, or 10 years down the line. Here are the most popular terms offered by leading life insurance companies. You will need to consider your current age, how long you are financially obligated to debts, and how long you will need to provide coverage to minor children before you settle on a term length.

How Much Will a Million Dollar Life Insurance Policy Cost You?

Life insurance rates vary from company to company. Companies specializing in offering policies with higher face amounts may charge lower premiums for million dollar policies than others. Your rate will depend on the basic rates charged by the insurer, your health, your current smoking status, your occupation, and even your lifestyle. Here is a sample of average rates charged to preferred, non-smoker males and females:

Average Million Dollar Life Insurance Rates

*RATES BASED ON 50 YEAR MALE IN GOOD HEALTH

• $1,000,000 of life insurance guaranteed for 5 year term = $1,315.00
• $1,000,000 of life insurance guaranteed for 10 year term =$1,165.00
• $1,000,000 of life insurance guaranteed for 20 year term =$2,105.00
• $1,000,000 of life insurance guaranteed for 30 year term =$3,790.00

Return of Premium Policy – ROP after term period

$1,000,000 of ROP life insurance 20 year term=$6,770.00
$1,000,000 of ROP life insurance 30 year term=$8,800.00

Term Insurance or Permanent Insurance?

Before you submit your application, you should determine whether or not you have a permanent need for coverage. Term insurance costs significantly less than permanent insurance because it is temporary. But if you need coverage to pay for estate taxes, it is important to assess whether or not you need a whole life insurance in addition to your million dollar term policy. To compare premiums, review the rates for both term and permanent insurance. Then, determine how much coverage you will need for your entire life and request smaller quotes to complete your life insurance portfolio.

How Can My Health Affect My Million Dollar Life Insurance Rates?

If you are aware of existing health issues, these issues need to be listed on your life insurance application. You are mandated under law to disclose all of your medical conditions. If you currently being treated for chron’s disease, diabetes, epilepsy, or any other medical condition, but do not report it on your application you will be of breif of contract which can result in an unpaid claim. Even if you are being treated for a psychological condition such as manic depressive disorder, it must be reported. Say you purchase life insurance for bipolar disorder patient, but do not disclose their condition on the application, if that person commits suicide as a result of their condition the claim may go unpaid. Meaning, even if you paid all of your premiums Because of the high face value of a million dollar life insurance policy, insurers may require you to have lab work done and may even require an ECG. If the insurer finds that you have medical conditions, you may need to prove the conditions are controlled. If the health issues are serious in nature, your policy may be surcharged (table rated) or denied. It is important to understand underwriting requirements and medical requirements before applying for a high face value policy so that you are prepared for the process.

Other Factors Will Affect Your Rates

Aside from just your health, insurance providers look at a variety of other factors when underwriting your case. This is done in order for the insurance carrier to assess the risk you will not live out the policy. Some of these factors include, but are not limited to, whether or not you have a speeding tickets or a recent DUI on your record. Whether or not you participate in dangerous hobbies such as sky diving, scuba diving, or rock climbing. They also test your blood during a physical to see if you are a heavy drinker, cigarette, cigar, or pot smoker. All of these put you at risk for death and in turn put the insurance company in the position that they will need to pay out your claim.

Compare Million Dollar Life Insurance Rates

The first step to take whenever you are shopping for insurance is to compare rates. Because rates can vary so significantly, you should take time to save money long-term by doing an insurance company comparison. Certain companies offer different types of policies, such as AARP who offers insurance coverage only until age 80.Provide your information, request quotes, and you can see the rates available from leading insurers in the matter of minutes.

Mozdex Insurance Advisors have helped thousands of families secure their futures with proper insurance planning since 1997.