A million dollars sounds like a huge sum of money. And in most cases, it is. But when it comes to life insurance, that number may not stretch as far as you think. Whether it’s too much or not nearly enough depends entirely on your circumstances.
Understanding a Million-Dollar Policy
Life insurance is designed to provide financial security for your loved ones if you pass away. The right amount of coverage varies depending on where you are in life. For example, a retired couple with no dependents and solid savings might find that $1 million is more than sufficient. On the other hand, a young family with a mortgage, childcare costs, and long-term financial goals might discover that the same coverage doesn’t come close to meeting their needs.
What Expenses Should Be Considered?
When deciding on coverage, it’s important to account for more than just obvious debts. Mortgage payments, car loans, credit cards, and student debt are only part of the picture. Everyday living costs, children’s education, and future retirement income for a surviving spouse also play a role. When you add it all up, a million dollars can start to look much smaller.
Cost of a Million-Dollar Policy
Premiums for a million-dollar policy vary based on age, health, lifestyle, and whether you choose term or permanent insurance. Term policies are generally the most affordable, often starting around $30–$40 per month for young, healthy applicants. Permanent policies, however, can cost several hundred dollars each month. The difference comes down to structure: term policies expire after a set period, while permanent policies last a lifetime and can build cash value along the way.
Medical Exams and Eligibility
Most insurers require a medical exam for high-value policies, as part of the underwriting process. This includes reviewing your health history and sometimes obtaining medical records. While some companies offer no-exam policies, these typically cap at much lower coverage amounts. A million-dollar policy almost always involves a more thorough evaluation.
Is a Million Dollars Right for You?
Ultimately, the “right” amount of life insurance isn’t about picking a round number—it’s about making sure your loved ones are financially secure if you’re no longer there to provide for them. For some households, $1 million will be more than enough. For others, it might just scratch the surface of what’s required.
Final Thoughts
A million-dollar life insurance policy can be a strong foundation, but it’s not a one-size-fits-all solution. To decide if it’s appropriate, take a careful look at your financial obligations, long-term goals, and the needs of those who depend on you. Consulting with a trusted insurance professional can also help you determine the best fit and ensure that your policy truly protects your family’s future.
