A million-dollar life insurance policy might initially seem like too much coverage, but once you account for the long-term costs of dependent care and any outstanding debts, you may discover you need close to that amount, if not more.
The good news is that a $1 million life insurance policy is more affordable than you think, especially when you’re young and have fewer health complications.
Key takeaways
Purchase life insurance coverage at least 10 to 15 times your income; if you make $100,000 annually, that’s $1 million.
Account for any additional costs, like shared debts, when calculating your coverage needs.
There are no restrictions on how your beneficiaries spend a $1 million life insurance death benefit.
What is a million dollar life insurance policy?
A million dollar life insurance policy refers to a life insurance policy with $1 million as the death benefit coverage amount. Your coverage amount refers to how much money your beneficiaries would get if you died. Sometimes this is also called the “face” amount on your insurance policy.
A million dollar life insurance policy can be any kind of life insurance, as long as the face amount is $1 million. Term life insurance is the most popular coverage option for most people because it’s affordable, comes with few tax restrictions and limitations, and lasts only for as long as you need it.
Another common type of life insurance is whole life. Whole life insurance is a type of permanent coverage that doesn’t expire and usually has a cash value savings component in addition to the traditional death benefit.
Whole life is five to 15 times more expensive than term, and usually best suited for high-net-worth individuals or people with long-term financial obligations.
How much does a million-dollar life insurance policy cost?
A $1 million life insurance policy can cost, on average, less than $45 per month, especially if you’re young and in good health. How much you’ll end up paying will depend on the kind of policy you choose, how long your coverage lasts, your age, gender, health, and lifestyle habits, among other risk factors.
The most affordable million-dollar coverage you’ll find on the market will be a term life insurance policy. In general, the younger and healthier you are, the more affordable your rates will be.
For example, a 25-year-old non-smoking female might pay $33.45 per month for a 20-year, million-dollar policy, while a 45-year-old female in similar health would pay $86.45 per month.
$1 million average term life insurance rates by age and gender
Age | Gender | Monthly premium |
|---|---|---|
25 | Female | $3.95 |
Male | $44.18 | |
35 | Female | $42.74 |
Male | $51.51 | |
45 | Female | $90.01 |
Male | $115.04 | |
55 | Female | $224.30 |
Male | $315.32 |
Methodology: Average estimated monthly sample premiums are for male and female non-smokers in a Preferred health class, buying a $1,000,000, 10-, 15-, 20-, or 30-year term life insurance policy. Life insurance averages are based on a composite of policies offered by Policygenius from Banner Life, Brighthouse Financial, Corebridge Financial, Lincoln, Mutual of Omaha, Pacific Life, Protective, Prudential, Symetra, Foresters, and Transamerica, and may vary by insurer, term, coverage amount, health class, and state. Not all policies are available in all states. Rate illustration valid as of 06/01/2023.
→ See more term life insurance rates
Monthly costs for a 10-year, $1 million term life insurance policy
Age | Gender | Monthly premium |
|---|---|---|
25 | Female | $22.51 |
Male | $28.96 | |
35 | Female | $25.18 |
Male | $30.10 | |
45 | Female | $53.67 |
Male | $63.82 | |
55 | Female | $122.80 |
Male | $155.69 |
Methodology: Estimated monthly sample premiums are for male and female non-smokers in a Preferred health class, buying a $1,000,000, 10-year term life insurance policy. Life insurance averages are based on a composite of policies offered by Policygenius from Banner Life, Brighthouse Financial, Corebridge Financial, Foresters Financial, Lincoln Financial, Mutual of Omaha, Pacific Life, Protective, Prudential, Symetra, and Transamerica, and may vary by insurer, term, coverage amount, health class, and state. Not all policies are available in all states. Rate illustration valid as of 06/01/2023.
Monthly costs for a 15-year, $1 million term life insurance policy
Age | Gender | Monthly premium |
|---|---|---|
25 | Female | $27.72 |
Male | $33.92 | |
35 | Female | $32.84 |
Male | $38.80 | |
45 | Female | $68.37 |
Male | $83.67 | |
55 | Female | $155.96 |
Male | $220.73 |
Methodology: Estimated monthly sample premiums are for male and female non-smokers in a Preferred health class, buying a $1,000,000, 15-year term life insurance policy. Life insurance averages are based on a composite of policies offered by Policygenius from Banner Life, Brighthouse Financial, Foresters, Lincoln Financial, Mutual of Omaha, Pacific Life, Protective, Prudential, Symetra, and Transamerica, and may vary by insurer, term, coverage amount, health class, and state. Not all policies are available in all states. Rate illustration valid as of 06/01/2023.
Monthly costs for a 20-year, $1 million term life insurance policy
Age | Gender | Monthly premium |
|---|---|---|
25 | Female | $32.49 |
Male | $43.62 | |
35 | Female | $41.78 |
Male | $50.73 | |
45 | Female | $85.98 |
Male | $112.07 | |
55 | Female | $205.51 |
Male | $280.08 |
Methodology: Estimated monthly sample premiums are for male and female non-smokers in a Preferred health class, buying a $1,000,000, 20-year term life insurance policy. Life insurance averages are based on a composite of policies offered by Policygenius from Banner Life, Brighthouse Financial, Corebridge Financial, Foresters, Lincoln, Mutual of Omaha, Pacific Life, Protective, Prudential, Symetra, and Transamerica, and may vary by insurer, term, coverage amount, health class, and state. Not all policies are available in all states. Rate illustration valid as of 06/01/2023.
Monthly costs for a 30-year, $1 million term life insurance policy
Age | Gender | Monthly premium |
|---|---|---|
25 | Female | $50.56 |
Male | $67.10 | |
35 | Female | $68.35 |
Male | $83.26 | |
45 | Female | $147.63 |
Male | $194.99 | |
55 | Female | $403.90 |
Male | $585.72 |
Methodology: Estimated monthly sample premiums are for male and female non-smokers in a Preferred health class, buying a $1,000,000, 30-year term life insurance policy. Life insurance averages are based on a composite of policies offered by Policygenius from Banner Life, Brighthouse Financial, Corebridge Financial, Foresters, Lincoln Financial, Mutual of Omaha, Pacific Life, Protective, Prudential, Symetra, and Transamerica, and may vary by insurer, term, coverage amount, health class, and state. Not all policies are available in all states. Rate illustration valid as of 05/01/2023.
Monthly costs for a $1 million whole life insurance policy
Age | Gender | Monthly premium |
|---|---|---|
25 | Female | $660.00 |
Male | $765.00 | |
35 | Female | $947.00 |
Male | $1,121.00 | |
45 | Female | $1,417.00 |
Male | $1,690.00 | |
55 | Female | $2,332.00 |
Male | $2,173.00 |
Methodology: Rates are calculated for non-smokers in a Preferred health classification, obtaining a whole life insurance policy payable within 99 years from MassMutual. Individual rates will vary as specific circumstances will affect each customer's rate. Rate illustration valid as of 06/01/2023.
→ Read more about the differences between term and whole life insurance
Ready to shop for a $1 million life insurance policy?
Does gender affect the cost of a million-dollar term life insurance policy?
Yes, it does. In addition to your health and age, gender is one of the main factors that impact how risky you are to insure — and the riskier you are from an insurer’s perspective, the higher your premiums will be.
Because men have a shorter life expectancy than women, [1] they usually receive higher life insurance rates, even if they apply for the same coverage amount.
Do you need a million-dollar life insurance policy?
If you’re making $100,000 or more per year, chances are you’ll likely need a $1 million dollar life insurance policy. Such a death benefit will provide your loved ones with enough funds to cover any financial responsibilities if you die.
Policygenius advisors recommend purchasing coverage that is 10 to 15 times your income — that’s why a million-dollar policy might not be as far-fetched as it might initially sound.
The amount of life insurance protection you need will depend on your personal situation. If you’re younger, you may want more coverage for future financial obligations, while if you’re closer to retirement, you’ll likely need less.
The best way to determine whether you need a million-dollar policy is to calculate your current expenses and future financial obligations. For example, say you:
Make $100,000 per year
Have $200,000 remaining on your mortgage and
Plan to have a child before your policy expires
Your remaining home loan plus the cost of raising a child (approximately $310,605) [2] would total over $500,000. To cover your mortgage, childcare expenses, and provide an income replacement equal to even five years of your $100,000 salary, you’d need $1 million in coverage.
Every person’s situation is unique, so the best way to determine if a million-dollar policy is right for you is to work with an independent broker.
At Policygenius, our experts are licensed in all 50 states and can walk you through the entire life insurance buying process while offering transparent, unbiased advice.
→ Learn how to calculate how much life insurance you need
What does a million-dollar life insurance policy cover?
When the insurer pays the death benefit to your beneficiaries, there are no restrictions on how it’s spent.
Here are some common ways beneficiaries spend the death benefit:
Childcare or dependent care
College tuition
Investing
Medical expenses
Monthly bills and everyday expenses
Outstanding debts
The death benefit is generally paid out as a lump sum, which means you get the entire death benefit after filing the death claim, tax-free.
How to shop for $1 million term life insurance coverage
Buy early on. The cost of life insurance increases 4.5% to 9% every year you age. Buying life insurance while still young and in good health can help you lock in very competitive rates.
Compare life insurance quotes and companies. Insurance rates are regulated by law, which means no company, broker, or agent can offer you a discount on a policy. But because each insurer calculates risk differently, you’ll pay the most affordable premiums by shopping around with multiple insurers as opposed to working with just one.
Work with an independent broker. Brokers represent you and tend to offer more impartial advice, while agents work directly for the insurance companies. A Policygenius broker can help you find the best type of coverage and term length for your unique needs.
Ready to shop for a $1 million life insurance policy?
Who can buy a million-dollar life insurance policy?
Depending on the life insurance company and your age, you may not be eligible for a million-dollar policy. When you apply for life insurance, insurers evaluate whether you're purchasing a reasonable amount of coverage based on your individual circumstances.
This is usually based on your income, net worth, general financial stability, and what life insurance coverage you already have.
For example, if you’re a graduate student with limited income applying for a $1 million policy, you may only receive an offer of $250,000 with an option to apply for more coverage in the future.
Coverage based on age and income
Each provider sets a maximum amount of coverage individuals in each age group can purchase. Here are common ranges based on Policygenius’ partner insurance companies:
Under age 40: 25 to 30 times yearly income
Ages 40 to 60: 10 to 25 times yearly income
Ages 60 to 70: 5 to 10 times yearly income
Based on these ranges, you’d need to make at least $34,000 under age 40 to qualify for a million-dollar life insurance policy, but $100,000 to $200,000 to qualify at age 60.
For non-working spouses, providers may only offer you coverage matching that of your working spouse.
Net worth can also impact your insurance offer. If you’re a retiree in your 60s with a high net worth who earns $30,000 in yearly dividends, you may only apply for $300,000 in coverage but receive a greater offer to account for your total assets.
→ Read more about the best life insurance for seniors
Coverage based on existing coverage
If you already have some life insurance coverage and apply for another policy, you may receive a policy offer that is lower than the amount for which you applied.
For example, if you apply for a $1 million policy, but you already have a $500,000 life insurance policy, the insurance company may come back with an offer of only $500,000.
Each life insurance company approaches coverage maximums differently, so shopping around is the best way to ensure you get the right amount of coverage.
One million dollars can sound like a lot of life insurance, but if you have dependents or debts it may be the minimum amount of coverage you need.
If you think a million-dollar life insurance policy fits your financial needs, an independent agent or broker can help you find competitive pricing based on your profile.
Frequently asked questions
Do I need a million-dollar policy?
Policygenius advisors recommend buying coverage at least 10 to 15 times your salary, and up to an amount that accounts for any debts or dependents you have. If you make $100,000 per year, you’ll likely need at least $1 million in coverage.
How much does a million-dollar life insurance policy cost?
The cost of a policy varies based on your age, health, and other risk factors. For a 20-year policy, a healthy non-smoker might pay approximately $30 per month throughout their 20s, $40 per month in their 30s, $95 in their 40s, and $245 in their 50s.
Is a million-dollar life insurance policy enough coverage for me?
Tally up your income, expenses, debts, and any future expenses you anticipate, like a mortgage. A $1 million policy would be too much for a recent college graduate, but a family of five with a mortgage might need even more than $1 million in coverage.
