Who needs a million dollar life insurance policy?

Life these days is about finding the right balance, the perfect blend of work and play, needs and wants, saving and spending.

You’ll face the same type of decision-making when shopping for life insurance. Too little coverage can leave your family underinsured, too much can have you overpaying for your individual needs.

Consider: If the unexpected happened, and your family faced a future without you, your life insurance policy should be enough to replace your income for 5 to 10 years. If you earn $100,000 a year, $1 million in coverage may be just about right. And even if you earn less than that, there’s the mortgage, auto loans and the cost of sending your kids to college to consider.

Most of us would leave behind financial responsibilities, which is why it’s important to balance them with just the right amount of life insurance coverage to help protect your loved ones.

In addition to determining how much coverage you want to buy, it’s important to shop around and understand what you should factor into your policy decision making. Term life insurance is a pretty easy-to-understand product. But, there are a few best practices when shopping to ensure you choose the right policy and insurance provider for your financial situation. Here’s what you need to know when shopping for a $1 million life insurance policy:


If you’re thinking about buying $1 million in coverage, it’s important first to find out if you’re eligible. A combination of your age and salary information helps an insurer determine if you qualify for the amount of coverage you’re seeking. For most insurers, the maximum is anywhere between 10 to 30 times your annual salary with some variation based on your age. Typically, the younger you are, the higher your coverage eligibility is.

Most of the time, you’ll have no problem qualifying for the coverage you’re seeking if you’re employed (and assuming you’re eligible for coverage with your current health.) The situation can become a little more challenging if you are a student, unemployed or a stay-at-home parent. In these scenarios, you may want to work directly with the insurer to determine the coverage they’ll offer.

Additionally, you should use your income as a barometer for how much coverage you really need. If you earn $30,000 a year, for example, $1 million in coverage might be excessive.

Rather than trying to guesstimate, an online life insurance calculator can help you find your ideal coverage and eligibility. This way, you can properly gauge your family’s needs without having to do any air-math during the process.

Your life insurance needs

In addition to the calculator, keep these rules of thumb in mind:

In general, you should get coverage that’s 5 to 10 times your salary, and make sure your coverage is enough to help account for:

  • Your mortgage and other significant debts
  • Child care and dependent expenses
  • Cosigned debts
  • Health care costs for a non-working spouse and children
  • The cost of a funeral and final expenses

After considering how your family could afford these expenses without your income, you might find that $1 million in coverage is just right. Again, a life insurance calculator can factor in all this information to provide an estimate based on your family’s situation.

Company ratings

You purchase coverage to help financially protect your family in the worst of times. Therefore, it’s important to choose a company that you’re confident will be around for the life of your policy. Life insurance ratings can be a great tool in helping to determine this.

Life insurance companies receive ratings from independent agencies based on their financial strength, as well as the rating agency’s assessment of the company’s claims-paying ability.

So, what that really means is that insurance company ratings help indicate if your insurer will be around and pay out the policy if anything were to happen to you.

For example, at Haven Life, our Haven Term policy is issued by MassMutual, which is rated A++ by A.M. Best. That’s the highest rating available from A.M. Best.

The buying process

Depending on the approach you take, buying life insurance can be a real drain on your time. Traditionally, the approval process would take weeks, require several phone calls – maybe a fax or two – all with the hope of being eligible for coverage.

Modern technology has revolutionized the buying process. It’s now easier than ever to select the right coverage amount, apply entirely online and receive an instant decision on coverage.

If you can set aside a little time today, you could find out if you’re approved, how much it’ll cost and potentially start coverage.

The online application will ask about your income, your family structure, and your health. Answer each question openly and honestly for the most accurate pricing and results.

The price of a $1 million life insurance policy

It may surprise you how affordable $1 million in coverage can be. A healthy 35-year-old woman could purchase a 20-year, $1 million policy for about $35 per month. That’s a little more than $1 per day. Not a bad price for a significant amount of peace of mind.

And remember, pricing for coverage is affordable the younger and healthier you are. That’s why, if you know you need coverage, you’ll want to lock in your lower rate now.

Rates are also impacted by the term length of policy you choose. A 30-year term costs more than a 20-year or a 10-year term.

The bottom line: Your age and health, the amount of coverage, and the length of your policy will all impact how much you pay for coverage each month.

Choosing the right term length

Once again, it’s all about balance.

A longer-term policy will cost more, but it also lets you use your current age to lock in a lower rate for a longer period of time. A shorter-term policy costs less per month for now, but when the term expires, you may still be in need of coverage. In that scenario, you’ll need to either buy a new policy or extend your Haven Term policy. Regardless, rates will be significantly higher because you’ll be quite a bit older.

A life insurance calculator will take into consideration the ages of your dependents as well as your debts to provide a recommended term length so that you aren’t underinsured or overpaying for coverage.

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Buying a policy without a medical exam

Most fully underwritten term life insurance policies do require a medical exam to finalize coverage.

However, there are some scenarios where applicants won’t need to take a medical exam. For example, at Haven Life, we offer an InstantTerm process where some qualified applicants, ages 18-59, seeking a $1 million death benefit or less may be able to finalize coverage without a medical exam, based on the information provided during the application process. Customers are notified once an app is submitted if they qualify to skip the exam. [A note from our lawyers: Keep in mind that it’s always very important to be honest in the application process. The issuance of the policy or payment of benefits may depend upon the answers given in the application and their truthfulness.]

Once an application is submitted, Haven Term applicants will know if a medical exam is needed to finalize coverage. In most cases, you will have temporary coverage in the time between application submission and when we receive the medical exam results.

You don’t have to predict the future

One downside of getting life insurance is that it makes you contemplate your own mortality, but that comes with an upside. By considering what would happen to your loved ones if you died, you also have to consider what you’re worth, financially speaking, and the answer is often a lot more than you think. Even though you probably don’t earn a million bucks a year, or even half that, there’s still a good chance that you need a life insurance policy of that value. Here’s why.

If the worst happened, and your family faced a future without you, your life insurance policy should be enough to replace your income for 5 to 10 years. If you’re the breadwinner, your spouse might not be in a position to earn as much as you did (note the past tense, because in this scenario you’re dead), and that’s without even considering the extra demands on his or her time, since your spouse would now be the sole caregiver if you have kids. Viewed that way, 5 to 10 years is not a particularly long time, and if your income is around $100,000 a year, a million dollar policy could be about right.

Even if you earn less than that, a million dollars may still be the right amount of coverage, as there’s the mortgage, auto loans, and the cost of sending your kids to college to consider. Furthermore, your family’s health care costs could rise substantially if they no longer had access to your plan. It’s also worth taking into account where you are in your career. If you think you’re on track to increase your income over time, but you want to get life insurance now to lock in a low rate based on your current age and health, you might want to get a policy that relates to, or at least considers, your probable future earnings.

However, if you’re thinking that way, do so within reason. The purpose of life insurance is to replace lost income, not to generate new income, so if you’re earning $30,000 a year, a million dollar policy would probably be more coverage than you need. It could also be more coverage than you can afford to pay for, and in general, life insurance companies are unlikely to insure someone for an amount that is disproportionate to their salary.

The best way to figure out how much life insurance coverage you might need, and how much you’re eligible for, is to use an online life insurance calculator like the one at Haven Life. In a few minutes, it can help you determine you and your family’s needs, and give you a personalized quote for coverage.

After considering how your family could afford these expenses without your income, you might find that $1 million in coverage is just right, or you could discover that you need a bit more or a bit less. Again, a life insurance calculator can use all this information to provide an estimate based on your family’s situation.

So who needs a $1,000,000 life insurance policy? The answer may well be “you.” To find out for sure, try Haven Life’s easy-to-use life insurance calculator.

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Michael Davis is a freelance writer and editor who has covered everything from fashion and music to parenting, work, and finance. He has been a chef, restaurateur and record label owner.

Financial strength ratings are as of May 29, 2019: A.M. Best Company: A++ (Superior; top category of 15); Fitch Ratings: AA+ (Very Strong; second category of 21); Moody’s Investors Service: Aa3 (High Quality; fourth category of 21); Standard & Poor’s: AA+ (Very Strong, second category of 21). Ratings are for MassMutual (Springfield, MA 01111) and its subsidiaries, C.M. Life Insurance Co. and MML Bay State Life Insurance Co. (Enfield, CT 06082). Ratings are subject to change. Ratings do not apply to Haven Life Insurance Agency.

What Haven Life customers are saying:

Haven Term is a Term Life Insurance Policy (DTC 042017 [OK1] 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. Policy and rider form numbers and features may vary by state and may not be available in all states. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Our Agency license number in California is OK71922 and in Arkansas, 100139527.

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