You’ve probably heard the saying: “Life insurance is a good investment because you only die once.” It’s true! But that doesn’t mean it isn’t also a big commitment. A million-dollar life insurance policy will require you to pay thousands of dollars in premiums every year. So before you run out and buy one, it’s important to ask yourself: Can I afford this? How much is a million dollar life insurance policy? And would this be worth my money?
How much insurance do you need?
It depends on several factors. First and foremost, you need to consider what your family would need if you were no longer around. For example, if they lost their main source of income because they’re counting on their paycheck or inheritance in retirement, they may be entitled to Social Security benefits—but only if there are no other sources of income available to them.
The next thing to consider is your own financial situation: how much debt do you have? How much money do you want to be left over after your funeral expenses are paid and what are the chances that someone will pay off all these debts?
Can you afford the premium payments?
The next thing you need to look at is the cost of your premiums. When you’re comparing life insurance policies, it’s important to evaluate how much money each one would cost over time in order to make sure that you can afford the payments.
As a general rule of thumb, it’s best not to choose a policy that costs more than five percent of your annual income. For example, if you make $50 per hour and work 40 hours per week every week year-round (i.e., 50 weeks), then this rule says that your premium should be no more than $2 per hour ($1040).
Don’t let these mistakes hold you back
These mistakes can hold you back from getting a million-dollar life insurance policy.
- Don’t let a fear of debt hold you back. A million-dollar policy will cost more than the $25,000 one; however, it would be foolish to allow this fear to stop you from protecting your family’s financial future.
- Don’t let the cost of life insurance hold you back. Yes, a million-dollar policy will cost more than a smaller one; however, if it means that it could save your family after your death, then it’s worth every penny spent on premiums every month or year.
- Don’t let the cost of life insurance premiums hold you back. The average premium for term policies ranges between $1 and $5 per thousand dollars in coverage depending on age and health condition at the time when applying for coverage (also known as underwriting).
When it comes to life insurance, it’s best to err on the side of caution
Don’t be afraid to ask questions. If you have any questions about your policy, ask your agent or the insurance company. If they don’t answer to your satisfaction, get a second opinion from another agent or company. And if that doesn’t do it for you, go for a third and fourth opinion! Don’t stop until all of your concerns are addressed and put to rest—and then give yourself some time before making any decisions about changes in coverage or beneficiaries.
Life insurance is an important part of any financial plan. As per the professionals at Ethos, “It can help you protect your family and ensure they have the support they need in times of crisis, but it’s also useful as a way to prepare for retirement or even invest in real estate (more on that here).” So, if you’re looking at ways to grow your wealth, it may be time to consider getting a million-dollar policy.