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Is a million dollars enough life insurance?
One million dollars of term life insurance may not be enough for some people. If you’re a high earner, own a business, or have investment properties, you may want to consider higher amounts of coverage.
Once you sit down and total up all your financial responsibilities, a $5,000,000 or $10,000,000 term life insurance policy may not sound so extreme.
However, you may find that laddering life insurance policies may be a more affordable way to cover these many financial responsibilities.
Laddering Policies for Millions of Dollars of Life Insurance
Let’s say that you reviewed all your financial responsibilities and goals and decided you do need over one million dollars of life insurance.
A $5,000,000 life insurance policy that lasts 30 years may cost a healthy 30-year-old man about $240 each month. While this coverage is needed, perhaps this expense is a little unaffordable for him as he’s starting a family and opening a family business.
He could opt to ladder coverage to save money in the long run. Instead of buying one $5,000,000 policy, he could buy multiple life insurance policies to cover different obligations and goals.
First, let’s answer: Why does he need millions of dollars of life insurance?
- Protect his family
- Raising children
- Paying the mortgage
- Putting children through college
- Protect his business
- Small business loan debt
- Operation expenses
These are valid reasons to buy life insurance, but he can save money by buying more than one policy to cover these needs.
He knows he’ll need the most life insurance coverage during the years he’s raising children. Those first 20 years, he will have many financial responsibilities.
He also wants to have some life insurance protection for his spouse as he enters retirement.
He can save money and still maintain good life insurance protection by buying the following policies:
- A 10-year $2,000,000 life insurance policy for $32 per month.
- A 20-year $2,000,000 life insurance policy for $55 per month.
- A 30-year $1,000,000 life insurance policy for $52 per month.
- A 40-year $500,000 life insurance policy for $54 per month.
As his financial obligations decrease throughout his lifetime, his term life insurance coverage will also decrease.
- During the first 10 years, he will pay a total of $193 per month for life insurance coverage that provides $5,000,000 of financial protection during his children’s most formative years.
- After 10 years, his monthly premiums drop to $161 per month for life insurance coverage that provides $3,500,000 of financial protection for his family as his children continue their education.
- After 20 years, his monthly premiums drop to $106 per month for $1,500,000 in life insurance protection. At this time, his mortgage loan obligations have decreased substantially, and his children are beginning to become financially independent.
- After 30 years, his monthly premiums drop to $54 per month. He’s 60 years old and will have a remaining $500,000 life insurance policy to protect his spouse and business for another 10 years until he’s retired with less financial responsibilities.
Can I get a million-dollar life insurance policy without a medical exam?
Yes, it’s possible for you to get a million-dollar life insurance policy without being required to take a medical exam.
Many life insurance companies have no-exam and accelerated underwriting options for people looking to buy a $1,000,000 term life insurance policy. Not everyone will be eligible though.
Not all life insurance companies underwrite the same way, so some have more lenient qualification requirements than others. If you prefer to skip the medical exam, your independent life insurance broker will let you know if you qualify.
Is a million dollars of life insurance right for me?
A million-dollar life insurance policy may not be necessary for everyone. But, on the other hand, it might not be enough depending on your family situation.
If you’re not sure how much life insurance you need, check out our life insurance needs calculator. It will point you in the right direction. From there, you can run a term life insurance quote.
Using our quoting tool makes getting life insurance quotes simple. You can also adjust the term length and coverage amount as much as you need until you find a policy that fits well in your budget.
Plus, you don’t need to give up any contact information to run a free life insurance quote.
» Learn more: How Much Life Insurance Do I Need?