Buying a $3,000,000 Term Life Insurance Policy. What You Need To Know.

When shopping around for life insurance, one of the primary questions is, “how much coverage do I need?” In this article we are going to look at everything you need to know when purchasing a term life insurance policy with a $3 million death benefit.

We will look at the costs as well as other factors you need to be aware of when looking for coverage.

First thing is first. Let’s start with some sample rates so you can get idea of approximately how much a $3 million dollar term life policy costs. You can also run quotes right here on this website specific to you.

Term Life Insurance Rates for a $3 Million Policy

Below are sample life insurance rates with a $3 million death benefit. Rates vary greatly, depending on your age, health, gender, medical history, and lifestyle habits. If you are a smoker, you can plan to pay roughly two to four times as much as non-smoker rates.

50 year old non smoking man in excellent health

10 year term – $206 monthly

20 year term – $401 monthly

50 year old non smoking woman in excellent health

10 year term – $166 monthly

20 year term – $292 monthly

50 year old non smoking man in average health

10 year term – $461 monthly

20 year term – $766 monthly

50 year old non smoking woman in average health

10 year term – $339 monthly

20 year term – $552 monthly

60 year old non smoking man in excellent health

10 year term – $634 monthly

20 year term – $1,153 monthly

60 year old non smoking woman in excellent health

10 year term – $405 monthly

20 year term – $779 monthly

60 year old non smoking man in average health

10 year term – $1,133 monthly

20 year term – $2,171 monthly

60 year old non smoking woman in average health

10 year term – $742 monthly

20 year term – $1,447 monthly

How Do Companies Determine Term Life Insurance Rates?

Here are the components that insurance companies look at when determining your rates for a $3 million life insurance policy.


As a rule, life insurance rates go up as you get older. This is because insurance companies will see you as more of a risk. Once your term life policy is in place your rates can be locked in for the length of the term. For instance, if you buy a 20 year level term policy your rates will not go up for 20 years.

Medical History

Your overall health will play a crucial factor in buying life insurance, no matter the policy’s size. The healthier you are, the more favorable your rates and more likely you will be approved.

With a $3 million policy, most insurance companies will want to look at your medical records and have you complete a medical exam. They will review your overall health including what prescription medications you take and why, and what surgeries or hospitalizations you’ve had.

Understand that each company has different underwriting guidelines.  For example, one insurer might offer super preferred rates (best possible rate class), even if you are taking medication to control high blood pressure or high cholesterol. Other companies would offer a standard rating as a best-case scenario. Know that it’s important for insurance companies to understand your full medical history. In addition to knowing what illnesses you might have had in the past, insurance companies want to know if you are under treatment for the particular condition and if so is it under control. 


If you are a smoker, you can still get life insurance. However, your costs will be significantly higher than someone who doesn’t smoke. What’s important to note here is that insurers consider past smoking habits. For example, if you used to smoke but quit you might be able to qualify for non smoker rates. Most carriers will require you to be smoke free for 12 months before offering non smoker rates. Generally, the longer it’s been since you have smoked, the better your options.

Family History

When looking at your medical records, insurance companies may want to see if you have an elevated risk for certain health conditions. Most companies will ask about your parents and any siblings you might have to see if they have had cancer or heart disease. They will also want to know when they were diagnosed, whether they are still living, and when they passed away if they have passed away.


Because women tend to live longer than men, insurance companies see them as less of a risk even if you are in excellent health. All things being equal a man will pay more for a $3 million policy than a woman would as you can see by the sample rates above.


Some activities are considered high-risk, such as skydiving or scuba diving. If you engage in these activities, your rates will likely be higher. However, there can be many factors that go into determining that, such as how often you do it. For example, if you skydive every week, that is far riskier than doing it once a year.

Insurance companies will also look at whether you drink or take any illicit substances. Testing positive for any illegal drugs will result in an immediate denial. However, something like alcohol use won’t usually affect your rates unless you are a heavy drinker.

Financial Underwriting

Usually when people think about what’s needed to qualify for life insurance people don’t realize that you have to qualify financially. Understand it’s not like obtaining a mortgage. There’s no hard credit check for instance.

Instead you must pass what we call the “does it make sense” test. Imagine you are an insurance company. If all you knew about someone was that they make $30,000 a year and that they wanted a $3 million dollar policy wouldn’t you scratch your head for second? First thing is can they afford to pay the premium, and second is why do they need that much coverage?

Having said this, earned income is not the only factor an insurance company will consider. They will consider your overall net worth and specifically your need for insurance. Perhaps you have a special needs child that you will need to support for years to come. Perhaps, you need it as part of a buy sell agreement or key man life insurance policy.

The bottom line is does the coverage amount desired make sense? If so, it should pass financial underwriting.

Below are sample guidelines of how much life insurance you can qualify for based on earned income.  The older you are, the less coverage you can buy.

Age: <40

Coverage Amount: Up to 25 times your income

Age: 41-50.

Coverage Amount: Up to 20 times your income

Age: 51-55

Coverage Amount: Up to 15 times your income

Age: 56-65

Coverage Amount: Up to 10 times your income

Age: 66-70

Coverage Amount: Up to five times your income

Age: 71 and Up

Coverage Amount: Determined on a case-by-case basis

As you can see, you may not be able to get a $3 million death benefit simply based on these calculations. For example, if you are 55 and earn $100,000 per year, the maximum coverage you could buy is $1.5 million. Even if you are 35 and make the same amount, the most you could receive is $2.5 million.

Why Buy Term Life Insurance With a $3 Million Death Benefit?

It’s crucial to determine whether $3 million will be sufficient to meet your needs. Here are some of the top reasons why you may need $3 million dollars of coverage.

Multiple Dependents

Having more people who depend on you financially can very quickly inflate your coverage requirements. For example, perhaps you have three or four young children. If you were to die suddenly, would your spouse or significant other be able to care for them comfortably?

In some cases, you may be the primary income earner for the household, meaning that your family’s financial situation would be even more precarious if you weren’t around. So, having a policy in place to provide the needed income tax free money from the death benefit is necessary to keep your family afloat.

Another point to consider when looking at dependents is how that number will change over time. For example, if you have four children, and two of them are entering adulthood soon, you likely won’t need to provide for them. Because of these variables, you may choose a shorter or longer term.

High Cost of Living

Even if you don’t have very many dependents (i.e., just a spouse), where you live can impact your financial situation significantly. For example, a mortgage in San Francisco will be much higher than one in Bangor, Maine. In that instance, $3 million will not go as far, so it’s necessary to obtain a policy with a higher death benefit.

Life insurance can allow your family to maintain the same lifestyle and standard of living they have become accustomed too even if you were you to pass away.

Substantial Debts

If you have recently purchased a new home, the mortgage loan can easily be seven figures. If something were to happen to you before the house is paid off, will your spouse or significant other be able to afford it? Could they be forced to sell at time when the real estate market was down perhaps? Could they sell quickly if they needed to?

Other debts that can necessitate needing a higher amount of coverage include vehicles, tuition payments, and credit card balances. While some of this debt won’t pass onto your loved ones when you’re gone, some will. For example, if you have a joint credit card with your spouse, any outstanding debt becomes his or her responsibility. Even if your mortgage loan is solely under your name, your loved ones will likely want to continue to live in the same household, so they would have to take over the loan.

How Long Do You Need Coverage?

Because term life insurance expires at the end of the policy period, you want to be sure that you choose the right length. Typically, these plans will go from 10 to 30 years, with 10, 20, and 30-year terms being the most common.

When determining how long you need the policy for you need to consider exactly why you need the coverage. Perhaps at age 50 you need $3 million of coverage but maybe at age 60 you might need less coverage.  This could either be because there is less of a need for life insurance or perhaps because you’ve built up enough other assets so perhaps $3 million would not be necessary anymore. 

Sometimes it can make sense to have 2 policies and do a laddering strategy. As an example, perhaps you buy a $2 million term policy for 20 years and a $1 million dollar term policy for 10 years. This can be one way to help get you the coverage you need at the most affordable cost to you.  

As an example, let’s say that you have two children who will be attending college within the next 5 years. In that case, a 10-year policy may make the most sense. Similarly, perhaps your mortgage will be paid off in 10 years, so you won’t need as much coverage afterwards. By understanding the reasons behind getting this level of coverage, you can determine the best plan.

Contact Us Today

As we mentioned, the best way to make sure that you find the best rates for a $3 million policy is to compare different insurance companies. Helping people over 50 obtain affordable life insurance is what we do. We can help you navigate these plans so that you find one to fit your specific needs. Call us to find out more.