Once you decide to secure a life insurance policy, the very first question you must answer is: How much life insurance do I need? The answer to this question is a personal one with many variables.
How to Determine the Amount of Life Insurance You Need
If you have or are planning to have children before your policy expires, you will want to leave adequate funding for their well-being. If you have a mortgage in your name or other outstanding debts, those should be factored in, so the burden is not left on friends and family. You will also want to replace your income for a period of time. Many advisors will suggest a policy that is equal to 10 years of income replacement. These numbers add up quickly; for many people, a million-dollar life insurance policy may meet these needs.
The death benefit of a policy this large can be used to settle any remaining debt of the insured, cover medical expenses, pay for funeral and burial arrangements, pay toward childcare or tuition, and offset regular monthly expenses for a period of time. If you have specific wishes for your loved ones, make them known. But keep in mind that when your beneficiary receives your death benefit, they may use it at their own discretion how they see fit. There is no restriction on how they spend this money.
Costs to Expect
While a million dollars is a lot of coverage, the price tag may not be as high as expected. Healthy individuals in their 30’s might pay well under $50 per month for that kind of coverage. But over 55, the premiums could be over $200 per month. As with any policy, the cost of a million-dollar life insurance policy will vary from person to person, depending on some of the following factors:
- Age – The younger you are when applying for life insurance, the lower your premiums will be. It always pays to apply as early as possible.
- Gender – Men typically pay more for life insurance because of their calculated life expectancy.
- Location – Where you live, and the regulations regarding insurance in your state will affect your policy’s price.
- Health – Your overall health and lifestyle habits will also determine how much you will pay per month for life insurance.
Need Coverage? We Can Help
Not everyone will qualify for a million-dollar policy. Your insurer will determine whether this is an appropriate coverage amount based on your situation. It is considered reasonable for a younger person to purchase a policy with up to 40 years worth of income replacement, while someone in their 60s might not be able to get coverage for more than ten years of income replacement.
If you’re interested in learning more about your life insurance options, Remco Insurance Services is here to help! Call us today for more information.