In this article we will look at how much a 1 million dollar permanent life life insurance policy costs. It’s important to understand some things about permanent life insurance. Many people think they want to buy a whole life policy. However, that’s not what a lot of people actually really want. Oftentimes people are just wanting to buy permanent life insurance coverage. They want a policy that they cannot outlive. Their wanting a policy that will be around for their whole life and is guaranteed to payout to their beneficiaries when they die.
Types of Permanent Life Insurance
There are actually several types of permanent life insurance. Whole life is just one type of permanent life insurance. Others include indexed universal life, universal life and guaranteed universal life (GUL).
All of these types of permanent life insurance products can be good. And at the same time, they can also be bad. It all depends on why you are wanting to purchase the policy. One of the great things about whole life and indexed life is that if they are set up the right way, and funded properly, they can be great policies to help you build up cash value over time.
However, lets assume your goal is just to pay the least that you have to pay for a 1 million dollar permanent life insurance policy. If this is the case a whole life policy is probably not what you should buy.
Understand that whole life policies provide a guaranteed death benefit and a cash value component. If we assume your primary objective is to build cash value, then an optimally designed cash building whole life policy can be a great thing. Having said that, we typically will not recommend using a whole life policy as a way to build cash value if you are over the age of 50 or 55. The internal cost of insurance is usually too high. And also you don’t have enough time for the cash value to grow for it to make a lot of financial sense.
On the other hand, if your primary objective is to obtain a 1 million dollar life insurance policy that is guaranteed to stay in force no matter how long you live, then a guaranteed universal life (GUL) policy will likely be a much better option for you. A GUL acts a lot like a term life policy. To be clear though it is not a term policy. Term policies are offered as coverage for a temporary period of time such as for 10 or 20 years for instance. Term policies do not build cash value. You are just paying the least you have to pay for the coverage you need.
A guaranteed universal life policy also does not build cash value. The policy is designed so that you pay the least you have to pay for the coverage you need. Unlike term life which is temporary, a guaranteed universal life policy can be designed to stay in force for your whole life…even if you live to be 120 years old.
Now, let’s look at what a 1 million dollar life insurance policy costs that will cover you for your entire life.
Cost For 1 Million Dollar Life Insurance Policy For Lifetime Coverage
If the objective is to get coverage that will last your lifetime, and is guaranteed to stay in force as long as you continue to make the payments, then a guaranteed universal life policy is the best policy to get.
Below are sample rates for 1 Million Dollars of guaranteed universal life coverage. These sample rates are based upon a policy that guarantees coverage until you are 110 years old.
1 Million Dollars of Lifetime Coverage – Non Smoking Man In Great Health
Age 50 – $772 monthly
Age 55 – $1,034 monthly
Age 60 – $1,315 monthly
Age 65 – $1,792 monthly
Age 70 – $2,511 monthly
Age 75 – $3,515 monthly
Age 80 – $5,837 monthly
1 Million Dollars of Lifetime Coverage – Non Smoking Man in Average Health
Age 50 – $1,006 monthly
Age 55 – $1,263 monthly
Age 60 – $1,654 monthly
Age 65 – $2,330 monthly
Age 70 – $3,138 monthly
Age 75 – $4,218 monthly
Age 80 – $6,375 monthly
1 Million Dollars of Lifetime Coverage – Non Smoking Woman In Great Health
Age 50 – $688 monthly
Age 55 – $891 monthly
Age 60 – $1,128 monthly
Age 65 – $1,505 monthly
Age 70 – $2,197 monthly
Age 75 – $3,166 monthly
Age 80 – $5,019 monthly
1 Million Dollars of Lifetime Coverage – Non Smoking Woman In Average Health
Age 50 – $844 monthly
Age 55 – $1,010 monthly
Age 60 – $1,367 monthly
Age 65 – $1,841 monthly
Age 70 – $2,570 monthly
Age 75 – $3,752 monthly
Age 80 – $5,583 monthly
Qualifying for 1 Million Dollars of Life Insurance
The insurance company you apply with will review your overall health and lifestyle habits. Additionally, they will determine whether you qualify for the coverage you are seeking from a financial standpoint.
Let’s look first at how your overall health history and lifestyle habits affects what rates you are likely to qualify for.
Health and Lifestyle Habits
This might be obvious, but the better your overall health, the better the rates you will be approved for. Insurance companies will usually approve you for coverage at one of about 12 different rate classes. This varies a bit depending on the insurance company. The better the rate class you are approved for the lower the premium you have to pay.
Know that every insurance company has different underwriting guidelines that they follow. Some companies are more lenient with certain health conditions than others. The key is making sure your application is submitted to the insurance company that will look at your application most favorably.
For instance, some insurance companies will not approve you at the best rates they offer if you take medication for high blood pressure. Even if your blood pressure is well under control it does not matter to them. Other companies will gladly approve you at the best rates they offer even if you take the medication. They are just concerned with whether or not your blood pressure is under control or not.
There are other factors that play a role in what rates you are likely to be approved for. These include your lifestyle habits such as smoking, driving history, and any travel you might do to any concerning parts of the world.
Not everyone can buy a $1,000,000 whole life policy. You see the insurance company may decline your application even if you can afford to make the payment.
‘For instance, let’s say you make $50,000 a year and want to have $1,000,000 of life insurance. And let’s say your reason for wanting to purchase life insurance was so that your spouse and/or kids would have the funds to needed to replace your income. Can you get $1,000,000 of life insurance if your income is $50,000? Well, it depends.
Insurance companies have guidelines that they follow for income replacement. Below are the guidelines from one company. This is how much life insurance you can buy based upon your age.
Ages 40 and under – Up to 25 times your income
Ages 41-50 – Up to 20 times your income
Ages 51-55 – Up to to 15 times your income
Ages 56 – 65 – Up to 10 times your income
Ages 66-70 – Up to 5 times your income
Ages 71 and over requires individual consideration
Let’s say you are 40 years old. If you are buying life insurance for income replacement, you can get up to 25 times your income which is $1,250,000. You would easily qualify for $1,000,000.
If you are 60 you could only get a policy for 10 times your income which is $500,000.
You qualify for more life insurance at younger ages when buying life insurance for income protection. This is because you have many more years left to work. If you pass away early that’s many more years of income that need to be replaced.
Please understand that these are just guidelines. There are many exceptions. Maybe you have a special needs child that you are wanting to provide for, for the rest of their life. Or perhaps you have 9 kids! That’s a lot of mouths to feed. You get the idea. It just has to make sense.
There are many reasons you may need life insurance. Some of which include for estate planning, for a divorce settlement, perhaps as part of a buy-sell agreement or key man policy for a business, or as a way to pay off certain loans or other debts. These are just some other examples.
The key thing to remember is it has to pass the “does it make sense” test.
How Can We Help
We can help you get the coverage you are looking for. We work with over 50 highly rated insurance companies. Keep in mind that all insurance companies have different rules and underwriting guidelines that they go by. We can help you determine the best company for you to submit your application with to help ensure you get the best policy for what you need at the best possible rate.
Chances are you have questions. Give us a call. We are here to help.
We look forward to an opportunity to help you get the coverage you are needing.