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Who needs a $2 million life insurance policy?

Choosing the right amount of coverage doesn’t have to be difficult. Here’s when a $2 million life insurance policy might be the right choice for you.

None of us want to think about the worst happening, but it’s important to plan for the future. And one of the best ways to financially plan for an unexpected future is to have life insurance. A policy provides a financial safety net that can be used by your loved ones to cover expenses, like a funeral, the mortgage, child care … the list goes on. This

So if you have financial dependents, you know you need life insurance. But how much do you need? Well the right amount of life insurance will depend on your income, expenses, family structure and a few other factors.

Which brings us to the life insurance policy you were interested in learning about: $2 million. It might seem like a huge amount of money because, well, it is. Still, consider how much of a financial gap you would leave in your loved ones’ lives if something should happen to you. There are years of expenses to consider, from your own funeral to your mortgage to college tuition up the road. It all adds up. And if you’re thinking “I can’t afford the monthly premiums on that big of a policy,” well, you may be surprised at how affordable a million dollar+ policy actually is.

Read on to learn whether this much coverage is right for your life insurance needs.

In this article:

Who needs life insurance coverage?

Let’s start here: For most people, life insurance coverage is an important part of a responsible financial plan for the future, especially if you’re at a stage of life where other people are depending on you to pay for their expenses. This often means a partner, spouse, and/or children. But it could also mean a sick or aging family member you help take care of. Think of it this way: If you weren’t around, would there be other people who would struggle financially in your absence? If yes, you probably need life insurance as part of your financial planning.

You might wonder what exactly life insurance covers. The answer is: Whatever you need it to. With term life insurance, you pay a monthly rate, known as a premium, for the duration of your term (often 10, 15, 20 or even 30 years). In exchange, if something happens to you before the end of that term, your beneficiaries will receive the full amount of that policy, which they can use to cover bills or other expenses. That includes the big stuff like funeral expenses, mortgage or rent, and education. It can also include the smaller-yet-important things like groceries or the electric bill.

You know when people talk about backup scenarios — safety schools, second-string quarterbacks, your plan B restaurant if the Plan A restaurant is too full — as insurance policies? Well, an insurance policy is like that, your back-up if Plan A doesn’t go as expected for your family.

Types of life insurance you can buy

You also have different types of life insurance options for a $2 million policy. There’s whole life insurance, also known as a permanent life insurance policy. With this type of life insurance product, you’re paying for coverage for literally the rest of your life. That coverage has a cash value, too, that acts as a financial planning tool and can be borrowed from to help pay for expenses like education or even to supplement retirement. Keep in mind that borrowing from the policy may reduce the death benefit paid to your loved ones, as well. All this is to say that permanent policies can be a bit complicated and are more expensive than term policies.

A term life insurance policy, true to its name, covers your family for a set period of time (the “term”). Typically you have a term policy in place that lasts until retirement, your mortgage is paid off and / or when your kids are financially independent. You’ll typically pay a guaranteed level premium, which is another way of saying that your monthly premium payment will stay the same for the duration of your policy. A term life insurance policy tends to be the most affordable way to get coverage, even for a $2 million policy. For example: a healthy 35-year-old woman can buy a 20-year, $2 million term life insurance policy for about $63 per month. A $2 million whole life insurance policy will usually be 5-10x more per month, which is cost prohibitive for many families.

How much life insurance do you need?

Prepare for some words you might not expect to hear from a life insurance agency: Yes, there is such a thing as too much life insurance. More isn’t always better when it comes to life insurance. What’s important is getting enough coverage to help financially protect your loved ones in case something happens to you, without getting so much that the premiums don’t make sense within your budget.

So is a $2 million term life insurance policy the right amount for you? It’s generally recommended that you get a policy for roughly 5 to 10 times what you earn a year (with some exceptions in either direction). That means a $2 million dollar policy could be a good fit for someone whose annual salary is $200,000 to $400,000. You might also want to consider that much coverage if you have extensive mortgage or other debt, or if you’re the primary breadwinner in your family. Fortunately, finding out the right amount of life insurance for your family is easier than ever, thanks to simple online calculators like this one from Haven Life.

Am I eligible for a $2 million life insurance policy?

Just as not everyone needs $2 million in coverage, not everyone qualifies for that much coverage, either.

Insurance companies consider a combination of factors including your age, your health, and your annual salary when determining how much coverage you might qualify for. Typically, the maximum coverage you can buy is between 10 to 30 times your annual income, though this may vary depending on your age and your health. In this case, that means a healthy 30-year-old would need to make at least $67,000 per year to qualify.

Life insurance needs aren't one-size-fits-all.

Calculate your needs

How much does a $2 million life insurance policy cost?

The cost of a $2 million dollar life insurance policy depends on a number of variables, like your age, your health and the term length of your coverage. It will also depend on what type of coverage you get, with a $2 million term life insurance policy costing much less than whole life insurance.

Of course, the younger and healthier you are, the more affordable your monthly insurance premiums will be. And locking in that rate over the course of, say, a 30-year policy, could add up to substantial savings over time. For example, a 30-year-old man in excellent health would pay $127.03 per month for a 30-year, $2 million policy. If that same man were just two years older, and his health went from “excellent” to “good” (it happens), he would pay $171.82 per month — a nearly $45 difference, which adds up to more than $16,000 over the course of the term.

Quotes for a $2 million term life insurance policy

AGE GENDER HEALTH TERM LENGTH FACE AMOUNT PREMIUM
30 Male Excellent 30 year $2 million $127.03
Female Excellent 30 year $2 million $102.92
35 Male Excellent 20 year $2 million $75.35
Female Excellent 20 year $2 million $63.30
40 Male Excellent 15 year $2 million $73.63
Female Excellent 15 year $2 million $71.92
45 Male Excellent 10 year $2 million $102.92
Female Excellent 10 year $2 million $89.13
Source: Term life insurance quotes for the medically underwritten Haven Term policy issued by MassMutual. Coverage is available up to $3 million.
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How to buy a $2 million life insurance policy

Applying for life insurance online is simple with digital agencies like Haven Life. To start the process, you get a cost estimate for your coverage and then complete an online application. If you’re applying for a $2 million policy, you will usually be asked detailed health and lifestyle questions in the application process. All of this can be conveniently answered online in about 20 minutes. Most life insurance policies over $1 million will also require a medical examination. The exam itself is quick and simple—often taking place at your own home, or another place of your choosing. The end result? Peace of mind that’s backed by MassMutual, a leading life insurer. It

Something to keep in mind when shopping for life insurance is to choose a life insurance company you can trust and that has a long history of financial strength. For example, MassMutual, which issues policies sold by Haven Life, is rated A++ by one of the most respected independent rating agencies around, A.M. Best. A++ is the highest possible rating, meaning it “has a superior ability to meet obligations.” (We gotta say, “superior ability” is always a nice thing to hear.)

Another third-party source to consider is TrustPilot. Haven Life has received a 4.8-star rating (out of 5) from real-life customers. Not too shabby, if we do say so ourselves.

What customers say about their life insurance rates

Leaving a financial safety net for your loved ones

If you decide you need a $2 million life insurance policy, or less coverage, or more coverage, the important thing is to make the decision sooner rather than later. By adding the cost of life insurance into your overall financial plan, you can help ensure your family can cover financial obligations in the event of your death. Don’t forget that both your income and your family’s expenses are likely to increase over the years, so it’s often worth going for a bit more coverage rather than risking being underinsured.

So whether you choose coverage of $2 million or another amount, ultimately it’s about knowing you’re taking steps to protect your loved ones financially if the worst was to happen. That’s peace of mind, and it’s priceless.

Why Haven Life?

The answer to that question is easy (which is exactly how Haven Life makes applying for term life insurance)

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Emily Fowler

About Emily Fowler

Emily Fowler left her career in finance almost 10 years ago to pursue her ambition to write, and has never looked back. Since then her work has appeared on The Billfold, FinTech Futures, The Dubs, and more. She gets immense satisfaction from making financial topics accessible and engaging, but her other writing specialty is pets.

Read more by Emily Fowler

Our editorial policy

Haven Life is a customer-centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our editorial policy

Haven Life is a customer centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our content is created for educational purposes only. Haven Life does not endorse the companies, products, services or strategies discussed here, but we hope they can make your life a little less hard if they are a fit for your situation.

Haven Life is not authorized to give tax, legal or investment advice. This material is not intended to provide, and should not be relied on for tax, legal, or investment advice. Individuals are encouraged to seed advice from their own tax or legal counsel.

Our disclosures

Haven Term is a Term Life Insurance Policy (DTC and ICC17DTC in certain states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Haven Term Simplified is a Simplified Issue Term Life Insurance Policy (ICC19PCM-SI 0819 in certain states, including NC) issued by the C.M. Life Insurance Company, Enfield, CT 06082. Policy and rider form numbers and features may vary by state and may not be available in all states. Our Agency license number in California is OK71922 and in Arkansas 100139527.

MassMutual is rated by A.M. Best Company as A++ (Superior; Top category of 15). The rating is as of Aril 1, 2020 and is subject to change. MassMutual has received different ratings from other rating agencies.

Haven Life Plus (Plus) is the marketing name for the Plus rider, which is included as part of the Haven Term policy and offers access to additional services and benefits at no cost or at a discount. The rider is not available in every state and is subject to change at any time. Neither Haven Life nor MassMutual are responsible for the provision of the benefits and services made accessible under the Plus Rider, which are provided by third party vendors (partners). For more information about Haven Life Plus, please visit: https://havenlife.com/plus.html

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