How Much Does A Million Dollar Life Insurance Policy Cost?

Life can be expensive, and it can seem like there are hundreds of costs to cover – it’s easy to push life insurance to the backburner.

But, when it comes to protecting your family in the case of an unfortunate incident, you can’t afford to think small. It’s important to buy the level of coverage you need.

If you have a medium- or large-sized family and a middle-class income, a million-dollar policy may be the necessary amount. Costs are continually increasing, and a million dollars has become the new baseline for an insurance policy for many people.

But don’t panic – it might not cost as much as you’re fearing. Many people expect life insurance policies to cost much more than they actually do. In fact, the price difference between a million-dollar life insurance policy and one much less comprehensive can be marginal.

How Much Does a 1 Million Dollar Life Insurance Policy Cost?

The exact cost of a million-dollar policy depends on a lot of factors, like the type of policy you want to purchase and your own personal profile. Plus, different companies offer different rates.

When it comes to life insurance, generalizing is extremely difficult. However, it can help to look at the examples at both extremes of the spectrum to get a vague idea of how much you might be charged.

For a 30-year term life insurance policy, a woman aged 30 years old with no health issues might have to pay as little as $54. On the other hand, a 45-year-old man might be charged as much as $193 for the same package.

For a 20-year term, the woman would be charged $33 a month and the man $114 a month. And, for a 10-year term, the female would be charged $20 a month and the male $59 a month.

Of course, the costs would be much higher for smokers or anybody with an existing health condition.

Haven Life offers a great tool that lets you see a quote instantly based on your actual information (before submitting any personal information to them).

Your Instant Quote

Use the calculator below to see an instant quote (before submitting any personal data), based on your actual information.

While the tool will give a significantly more accurate view of how much a million dollar policy might cost you compared to the generic samples provided above, you’ll need to continue on with the process to know your real rate.

How Much Life Insurance Do I Need?

A one million dollar life insurance policy might sound like a lot at first, but once you start to break the figures down, it can suddenly seem like the bare minimum needed to maintain peace of mind. You might decide a one-million-dollar policy isn’t enough – you need two million, or even five.

Fortunately, you may find that jumping up in coverage doesn’t increase your monthly premium as much as you might expect, as seen in the instant quote tool above.

But how do you decide on the coverage amount?

A good rule of thumb is to take out a policy that’s 10 to 20 times your income.

But your exact coverage should take into consideration your earnings, how many dependents you have (including the annual cost of raising children AND their future college tuition), any financial obligations, your end-of-life expenses (typically $7,000 to $10,000), and your personal preferences regarding any financial cushion you’d like to provide, given your family’s standard of living.

After adding all that up, you may discover you don’t need a million dollar policy at all. If you’re a low earner or you don’t have any children yet, a $500k (or even less) policy might be perfectly suitable.

On the other extreme, if you’re a high-earner with an expensive lifestyle to maintain, are leaving a large inheritance, facing an estate tax or other similar reasons for high liquidity, or if you’re a key contributor in a small business, you may quickly discover you need a $5 million dollar life insurance policy – or even more.

A final consideration is that you could name a charity as the beneficiary of the life insurance policy. It might seem like a strange idea, but the charity would be able to get more money than if you just made a standard donation, and it’s also a way of getting a tax deduction on your estate and getting extra publicity for the charity.

Whatever amount of insurance you want to take out, one variable remains the same: the contrast between the price for people of different ages. It’s therefore essential to lock in a low rate while you can. The cost of a longer term might seem to be unjustifiable, but it will work out a lot cheaper in the long run buying a 10-year term policy now than in a few years.

What’s The Best Life Insurance Provider for Million Dollar Policies?

So, now you know how much life insurance you want to take out and how much you should be paying. But where should you go to get a life insurance policy?

It can be overwhelming to choose between companies when their sites are filled with jargon and industry-specific technology, but don’t let that put you off.

Here are some of the best providers out there:

Haven Life: Best Overall

For a fast and easy option, Haven Life is perfect. You can complete the entire process online – you don’t even need a medical exam. Since their coverage is issued by MassMutual – one of the oldest insurers in the USA – you’ll get the best of both worlds: a reliable and experienced company combined with the ease of doing everything digitally.

They have several accolades, including a top score on the Humans Rights Campaign Corporate Equality Index and the best rating for financial strength and claims-paying ability.

What’s more, the Haven Life Plus schemes include access to additional benefits. These include an online service to create a customized and legally valid will, a yearly subscription to the fitness app Aaptiv, and discounts for MinuteClinic, a convenient doctors office alternative found inside stores like Target and CVS. These features mean your family will not only be protected in your passing, but you’ll also get real support to keep you healthy and thriving.

Rates start from just $24.48 a month for million-dollar policies. You can apply for life insurance coverage up to $3,000,000. They take into consideration your income, the healthcare of a non-working partner, any debts, the cost of children’s education, social security, child care, and funeral expenses.

To be eligible:

  • U.S. Resident
  • Between 18 and 64 years old
  • Not in the military

Other situations that prevent Haven Life from being a viable option: you can’t use the policy to replace a previous policy or for a business, and they only offer individual term life insurance – no group life or permanent life options (most are best off with a term life policy anyway).


Banner Life is an offshoot of Legal & General Group, a multinational insurance company. They use different life insurance agents to sell their products. Men tend to spend a lot more money on life insurance than women, so Banner caters its policy specifically towards them.

Unlike Haven Life, you can choose between term insurance (which lasts for a set number of years only) and universal life insurance (which lasts permanently). There are also numerous riders, including coverage of children and the ability to access your death benefit before you die.

Similar to the online-only approval system of Haven Life, your application can be approved over the phone with no medical exam or doctor’s records for applicants applying for certain products who meet specific criteria.

Where Banner Life shines is in their treatment of most health conditions. For example, they offer a reconsideration feature to reduce premiums for former smokers who quit or plan to quit. That can really add up when you consider that most insurance policies last 20-30 years!

You can take out insurance with Banner in every state except for New York.


MetLife: Best for Permanent Life Options

The Metropolitan Life Insurance Company is a leading multinational insurance company and a recognized name amongst many. As a business that serves most of the top 100 Fortune companies, you can rest assured they’ll look after your needs.

They offer both term life insurance and various permanent life insurance options, including universal life insurance. There’s also a survivorship life insurance policy, which covers more than one life. Whatever you’re looking for, they’re therefore likely to offer an option perfect for you.

MetLife provides excellent customer service – it’s known for having trustworthy customer service reps that can be contacted via either email or phone.


AIG: Best for Diabetics

Another big name in the business is AIG (American Insurance Group). As you’d expect, they also offer a full variety of products, from term life insurance to whole life insurance to universal life insurance.

Rates start from just $14 for a $250,000 term life insurance plan, although, of course, you’d need to be young and in excellent health to secure such a low payment plan.

Due to the criteria used to assess applicants, AIG is particularly well suited to anybody who has recently lost weight or been diagnosed with diabetes, but less than ideal for those who have high cholesterol or have a family history of heart disease or cancer. Generally, it’s best-suited for those who are already healthy, which is why they’re able to provide such low rates.


PolicyGenius: Best for Price Comparisons

It can be tricky and time-consuming to get a fair quote for life insurance, especially if you’re not in perfect health. However, PolicyGenius remedies this issue. They don’t directly provide insurance, but rather, offer a sort of comparison shopping tool. Their site features products from most of the big-player companies, making it fast and efficient to find your best rate.

Another advantage of PolicyGenius is its focus on education. You can learn about the terminology used to describe insurance policies straight after you receive your quotes, and there’s also an Insurance Checkup tool to check whether you have the right insurance and coverage for your needs.

Well informed and with multiple quotes in hand? (Almost 😉 ) Guaranteed to make a smart choice.


How Does A Million-Dollar Life Insurance Policy Work?

Ultimately, life insurance policies work the same regardless of how much money they’re worth in total – it’s just that higher value policies involve more payments.

However, there are plenty of complexities when it comes to life insurance policies that confuse the average person. Let’s have a more detailed look at the breakdown of numbers, types of life insurance, and how your rate will be measured.

What Does It Cover?

A life insurance policy provides income replacement, and covers funeral costs and any unpaid medical bills.

You might think that health insurance should cover all your medical costs, but this no longer applies once you die. Moreover, if you’ve died from a terminal illness that lasted several years, many of those accrued costs wouldn’t have been covered by health insurance anyway – including personal care or experimental treatments. A life insurance policy can take care of those, rather than leaving the burden for your family.

Besides medical bills, your policy can also cover funeral or other end-of-life costs. These will vary depending on where you live and your family’s customs (certain traditions mean added cost). On average, funerals cost $7,000 to $10,000, but they can creep to $20k or more. Again, having a policy means that your loved ones won’t need to worry about this.

Income Replacement

You might be thinking your income doesn’t come close to $1 million, but you need to consider the cost of replaced income for years after you’re gone. It’s easy to see how this adds up ($50k a year for how many years??).

The general consensus is you should aim for a life insurance policy to cover 10-20 times your current annual income; for example, if you earn $50,000, you’d need a life insurance policy of at least $500,000. Of course, there are some exceptions, like owners of a new business who earn a low (or no) salary currently, but have high earning potential in the future.

The other factor you need to consider is interest rates. The lump sum of your life insurance policy isn’t withdrawn straightway, but rather, invested to make it go as far as possible. You’ll need to have a large policy to ensure that principle can generate enough income to replace yours. Assuming your investments will earn 5% a year (a modest estimation), you’d need an investment of $1 million to get $50,000 a year.

As well as covering the living expenses of your family, your insurance policy may also have to pay off your mortgage, cover college tuition for your kids (how many children do you have? public or private college? It adds up quick!), cars, and health insurance for your family.

Business owners may also have additional debts or financial obligations to consider, and those who provide for their elderly parents should factor those costs in as well.

Term vs. Permanent

Confused by the different products and companies using industry jargon? You’re not alone.

Term Life Insurance

Term life insurance is the best bet for most millennials. It’ll be your cheapest option, and will cover you until your net worth is enough to provide for your family.

Term life insurance protects for a certain term, or set amount of time – if you die outside of the set term, you won’t receive any benefits.

This means term insurance is best for covering things like future college tuition, income replacement for a surviving spouse, or any remaining mortgage payments.

The most common policy is 20 years, but you can adjust up (to 40 years) or down depending on your needs. The shorter the term, the cheaper your premium.

Permanent life insurance products, on the other hand, are guaranteed to last until you die: as long as you continue to pay the premiums, your policy remains in force. It’s best suited to anyone with adult children, their own business, a financial cushion, or those building a nest egg.

Types of Permanent Life Insurance

There are a few different types: whole life insurance, universal life insurance, and guaranteed universal life insurance. They’re all very similar, but there are some minor differences. The differences are mostly based on how the cash-value component (the portion of your payment that goes into a savings account) increases in value and what the premiums cover.

Whole life insurance involves paying premiums for a limited time; eventually, the cash value becomes large enough to pay for the premiums. When you retire, you can withdraw the cash value.

Universal life insurance was created with the idea that the cash-value component will generate interest to go towards reducing premiums – however, this relies on interest rates increasing or remaining the same rather than decreasing as they have recently. It’s less expensive than whole life insurance since if you stop paying your premiums, the death benefit could be depleted.

Finally, guaranteed universe life insurance carries no market risk – premiums remain the same, and you’ll have coverage as long as you pay them. It’s similar to term insurance in this way, except that you’ll continue to pay premiums throughout your life. If you think you’ll still need to cover costs or maintain assets or dependents when you retire, then it could be worth it. When people talk of permanent life insurance or universal life insurance, they’re generally referring to the guaranteed variety.

However, universal life insurance is also a lot more expensive – generally around five times more than term insurance. This means that for the average consumer it often isn’t worth it, but for some people, it may be. For example, a young family needs the most comprehensive life insurance possible – if a parent earning income to support them dies, a lot of insurance would be needed to cover all the costs.

If you can afford universal life insurance, it’s certainly the best option – but term insurance can ensure you’re protected for the most vulnerable part of yours and your families’ lives.

How Is Risk Measured?

Numerous factors affect the premium you’ll ultimately be charged:

  • Age
  • Health
  • Policy Term
  • Policy Size
  • Occupation
  • Hobbies & Habits

The older you are, the more likely it is that you’ll die while the policy is active, which naturally increases the rate you’ll be charged. Health is another important factor as this influences the point at which you’re likely to die. As well as being young, to get the best rate possible, you should be free of any health conditions like diabetes. Age also affects the multipliers insurance companies use while deciding whether you’re eligible for their packages. Anyone under the age of 40 can generally take out life insurance that is 30 times larger than their income, while those aged 60+ can only take out a policy 15 times larger than their income. This is a massive difference.

The nature of the policy itself can also affect cost. Lower terms mean lower costs because it becomes less likely the insurance company will have to pay out. Another factor is the size of the policy – a more comprehensive package of $1 million is naturally going to cost more than a basic $100,000 policy. However, it won’t cost ten times more even though it’s ten times larger – so it can be justifiable to take out a larger policy to get more for your money.

Finally, hobbies and habits can be relevant too. The insurance company probably isn’t going to care if you like to knit scarves in your free time or go to play snooker every weekend, but if you’re a horse rider or scuba diver, they might reconsider your rates. In terms of habits, activities like smoking vastly increase your health insurance quote.

If you do want to take out a health insurance policy, it’s highly recommended that you try to stop smoking as soon as possible. Some companies offer a lower rate for anyone who takes out a recognized program to help you quit or those who stop smoking.

How Big a Life Insurance Policy Should I Take Out?

If you’re still unsure exactly how big a policy you need to take out, you could check the life insurance needs calculator on Quotacy. All you need to do is enter some basic information about your assets, obligations, and what you might require funds for, and Quotacy will suggest how much life insurance coverage you might need to take out.

This is a great resource to play around with different figures. However, bear in mind that it doesn’t include the cost of college tuition.

Given that you’re a non-smoker in good health, a million-dollar life insurance policy might be more affordable than you once believed. Given everything that’s at stake, can you really afford to forsake a comprehensive life insurance policy?

The key is to take it out before you need it. If you manage to lock in a decent rate while you’re still young, you’ll thank yourself later on in life.

Grant Sabatier

Creator of Millennial Money and Author of Financial Freedom (Penguin Random House). Dubbed "The Millennial Millionaire" by CNBC, Grant went from $2.26 to over $1 million in 5 years, reaching financial independence at age 30. Grant has been featured in The New York Times, Wall Street Journal, BBC, NPR, Money Magazine and many others. He uses Personal Capital to manage his money in 10 minutes a month.

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