iQuanti: A million-dollar life insurance policy may sound like a lot, but since life insurance helps your family replace your income and pay off your debts, you might find it's the right amount for your needs.
That said, this level of coverage can cost more than a $250,000 or $500,000 life insurance policy might. However, many factors go into your final premium cost, and there could be ways to lock in lower premiums. This article will dive into several aspects that can impact how much a million-dollar policy costs.
Factors affecting a million-dollar life insurance policy
Numerous factors can increase or decrease the cost of your million-dollar life insurance policy. Keep these in mind as you shop around:
Term length
Longer life insurance term lengths cost more in monthly premiums. For example, Forbes found that a 30-year-old male would pay about $312 per year or $26 per month for a 10-year term life insurance policy with a death benefit of $1 million. This cost can move up to $480 per year or $40 per month on average for a 20-year policy. For a 30-year policy, that can reach $780 per year or $65 per month on average.
Policy type
The cost of a million-dollar term life insurance policy will differ depending on the type of policy:
- Term life insurance policy: Term life insurance lasts for a fixed amount of time, typically 10 to 30 years. After your term ends, you'll have to get a new policy to continue coverage. Term life policies tend to offer affordable premiums.
- Permanent life insurance policy: This type of policy lasts for your entire life and comes with a cash value growth component. The cash value earns interest tax deferred and allows you to build wealth over time. With these policies, keep in mind that premiums tend to be more expensive.
Riders
Riders are extra forms of coverage you can add to your life insurance policy to customize your coverage. For example, a terminal illness rider lets you access part of your death benefit while you're still alive if you are diagnosed with a terminal illness. You can use the funds for whatever you need, including medical bills and income replacement. Adding certain riders to a million-dollar life insurance policy can result in higher premium payments.
Your age
Premiums generally increase with age. For instance, a 30-year-old will pay lower premiums for a million-dollar life insurance policy than a 50-year-old with the same term length and death benefit. So, getting a life insurance policy while you're younger can help you pay less in premiums.
Your gender
Gender also plays a part in premiums. Men generally pay more on average for life insurance premiums than women do, due to women having a longer average life expectancy.
Your health
Health is a big factor in determining your life insurance premiums if you get a million-dollar life insurance policy that requires an exam. Any conditions or history of conditions can increase your premiums. Similarly, being a smoker can cause you to pay more in premiums.
Other lifestyle factors
Certain other lifestyle factors, like your job, can also impact the cost of a million-dollar life insurance policy. For example, if you work in an occupation considered high-risk — such as being an airline pilot or a first responder — your premiums may cost more. Similarly, high-risk hobbies like skydiving and car racing can result in higher life insurance premiums.
The bottom line
Plenty of factors relating to you, your policy details, your policy type, and even your lifestyle can impact the cost of your million-dollar life insurance policy. You can't change some, like your age or gender. But you can impact many others, such as improving your health, selecting the right term length, and changing your lifestyle.
Finally, you can shop with multiple insurers and compare quotes. This can help you find better rates for the same million-dollar coverage, saving you money without giving up the insurance you need.
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Original Source: How Much Does a Million-Dollar Life Insurance Policy Cost?
