Average Cost of $1 Million Life Insurance in November 2023 (2024)

How Much Is a $1 Million Life Insurance Policy?

On average, a 10-year term life insurance policy with $1 million in coverage will cost you $53 per month, while a 20-year term comes in at an average of $83 per month. Opting for a $1 million policy means higher monthly premiums than lower coverage amounts because insurers assume greater financial risk in the event of your passing.

Several factors can affect the monthly premium for a $1 million policy:

• Age: Younger applicants generally pay less.
• Health Status: Medical exams can reveal conditions that might hike your premiums, like being overweight.
• Smoking Habits: Non-smokers usually receive lower rates.
• Occupation: High-risk jobs may result in higher premiums.
• Policy Term: Longer terms usually come with higher monthly costs.
• Gender: Statistics indicate that women often pay less than men.
• Lifestyle: Risky hobbies like skydiving can increase your rate.
• Family Medical History: A history of certain diseases can also affect your premium.

Understanding these elements may help you anticipate costs and even adjust some variables to your advantage.

$1 Million Term Life Insurance Cost by Term Length

Term length refers to the duration your life insurance policy will remain active, typically ranging from 10 to 30 years. The term length you choose impacts your premium costs significantly.

Generally, shorter terms, like a 10-year policy, will have lower monthly premiums. The insurer takes on less long-term risk, as the odds of your beneficiaries filing a claim are statistically lower within a shorter time frame.

Conversely, a 20-year term will have higher premiums because the insurance company is committing to a more extended period and assuming a higher risk of you filing a claim. The table below illustrates these differences in cost for a $1 million term life policy.

$1 Million Term Life Insurance Cost by Age

Age plays a pivotal role in determining your life insurance premiums. Simply put, younger policyholders usually face lower premiums.

Insurance companies view younger applicants as lower risk since they are often healthier and have a longer life expectancy. As you age, the likelihood of health issues increases, making you a higher risk for the insurer. Consequently, premiums rise with each passing year.

If you're considering a $1 million term life policy, locking in a rate while you're younger can offer long-term cost benefits. The table below showcases how premiums change for different age groups, from 30 to 70 years old.

$1 Million Term Life Insurance Cost if You Smoke Or Are in Poor Health

Your health profile and smoking history play a role in setting your life insurance premiums. Insurance companies typically require a medical exam to assess your overall health, analyzing factors like weight, blood pressure and cholesterol levels.

Poor health metrics can lead to higher premiums, as insurers view you as a higher risk. Smoking is another significant factor; smokers can expect to pay substantially more than non-smokers. This is because smoking links to a host of health issues that elevate your risk in the eyes of insurance providers.

The table below highlights the average costs of a $1 million term life policy for smokers and policyholders in poor health.

Average Cost of a $1 Million Permanent Life Insurance Policy

The cost difference between a $1 million permanent life insurance policy and a term life policy can be significant. Permanent policies, which include whole and universal life, often have premiums up to 15 times higher than term life premiums. However, the exact multiple can vary depending on factors like age, health and the specifics of the policy.

This is primarily because permanent life insurance offers lifelong coverage and a cash value component that can grow over time. Insurers price these policies higher due to the extended coverage period and the added investment-like benefits.

In contrast, term life insurance provides coverage for a set period, such as 10, 20 or 30 years. Because the policy will expire if you outlive the term, insurers generally face a lower risk of a payout, making these policies more affordable.

The better choice between the two largely depends on your individual needs and long-term financial goals. If you're looking for budget-friendly, straightforward coverage for a specific time frame — perhaps until you pay off your mortgage or your children are financially independent — term life insurance is often the more sensible option. On the other hand, a permanent policy may be more suitable if you seek a policy that offers both lifetime coverage and investment opportunities.

Where to Get a $1 Million Life Insurance Policy

You can acquire a $1 million life insurance policy from traditional insurance companies and online brokers. Various platforms allow you to compare rates and policy terms, making finding a plan that suits your needs easier.

Transamerica and GEICO tie for offering the cheapest 10-year $1 million term policies, with an average monthly premium of just $26. Allstate follows closely behind at $29 per month. These rates make it feasible to obtain substantial coverage without breaking the bank.To help you make an informed choice, the table below details the average monthly premiums for a 10-year $1 million term life policy from different companies.

Do You Need a $1 Million Life Insurance Policy?

Determining the need for a $1 million life insurance policy hinges on evaluating your total financial obligations and the income required to maintain your family's lifestyle, minus any existing assets and insurance.

To decide how much life insurance you need, begin by tallying your financial obligations. These can include your mortgage, car loans, children's educational expenses and any anticipated future costs like college or weddings. Add to this the income your family would need to maintain their current standard of living in your absence. Then, subtract any savings, investments and existing life insurance. The remaining sum will guide you in choosing your proper coverage.

For example, let's say you have a $300,000 mortgage, anticipate $200,000 in educational costs, and want to provide $500,000 for income replacement. These add up to $1 million, making a policy of this amount a fitting choice.

Tips for Buying a $1 Million Life Insurance Policy

When considering a $1 million life insurance policy, a strategic approach can help you get the best deal and ensure that your coverage meets your needs. Here are some tips to follow:

• Assess Your Financial Needs: Calculate your debts, future obligations, and income replacement to ensure $1 million is the right coverage amount.
• Compare Quotes: Obtain quotes from some of the best life insurance providers to gauge market rates. Online comparison tools can make this process easier.
• Check Financial Ratings: Look up the financial stability ratings of potential insurers through agencies like A.M. Best or Moody's to ensure that the insurer is likely to fulfill its obligations when you or your beneficiaries file a claim.
• Review Policy Features: Examine the policy's terms, including premium payment schedules and any additional riders, to tailor coverage to your situation.
• Understand Exclusions: Familiarize yourself with scenarios where the policy won't pay out to avoid surprises later.
• Seek Professional Guidance: Consulting a financial advisor can provide tailored recommendations depending on your individual financial outlook.

If you prepare adequately and find the right coverage for your family's needs and financial profile, your life insurance policy can help you gain peace of mind.

$1 Million Life Insurance FAQs