For the majority of consumers, a $1 million seems excessive, but there is a vast majority of families that NEED that much coverage. Having enough life insurance is one of the most important investments that you can make for your family, but 40% of American households that don’t have enough insurance coverage. If they were to pass away, their family would be left with additional expenses that they don’t have the resources to cover.
The Importance of Life Insurance
Before we discuss the needs for a $1 million insurance policy, let’s explain the need for life insurance in general. Every year thousands of families lose a loved one unexpectedly. They find their lives turned upside down, and while they are going through the grieving process, they are suddenly stuck with massive bills and debts. This makes the whole situation much worse.
Life insurance is one of the most important investments that you’ll ever make for your family. It’s the only way to you could ensure that they will be protected, regardless of what happens to you.
While life insurance is vital for the future of families, there are vast majorities of people that don’t own an insurance policy. Only 44% of Americans have an individual life insurance policy on themselves or their spouses, which means there are over half of households that don’t have any protection.
Doing The Math
Before you automatically assume that you don’t need a $1 million insurance policy, add up the costs of your living, all of your debt, and some of your future expenses that your family could encounter. You don’t need to be a millionaire to need a million dollars of life insurance coverage.
One of the main purposes of a life insurance policy is to cover any final debt that your family would be responsible for paying off, and one the largest debts is mortgages. In 2015, the average mortgage size had grown to just under $300,000. If you were to pass away tomorrow, you family would have to pay off your mortgage. If you’re like the average American, your loved ones would have around $200,000 in debt as soon as you passed away, but that’s not all.
In addition to home loans, the typical household also has several other sources of debt. Once you factor in another $40,000 in student loans, $20,000 in car payments, and $10,000 in credit card debt, most families are looking at $270,000 in unpaid expenses that a grieving family would be left with.
Your current debt is not the only factor that you’ll need to account for when determining your life insurance needs, you’ll also need to look at any possible future expenses. The one expense you are not going to be able to avoid is your funeral costs, and that can cost around $10,000 when it’s all said and done.
If you have children, do they plan on going to college eventually? Will they need clothes, books, have field trips, need braces, etc.? If you were to pass away, your spouse would have to pay for all of these expenses by themselves, with only one income, but that’s how your life insurance policy can help, but you’ll need to account for all of these costs when you’re purchasing your plan. For example, if you have a child that wants to go to an in-state college and receive a four-year diploma that will come with a $24,000 price tag every year for tuition, which translates to a total of $96,000. For a private college, the annual tuition jumps to around $48,000, and that’s going to put a family in the hole of just under $200,000. If you add that with the mortgage payments and the other debts, you’re already at $500,000, and that’s assuming that you only have one child that plans on going to college.
As you can see, all of the debts, future expenses, and final bills can quickly add up to a million dollars or more. Not having enough life insurance coverage can be as detrimental to your family as not have life insurance at all. It’s vital that you understand your insurance needs and you purchase a plan that fulfills them.
The Cost of a One Million Dollar Policy
If you’ve discovered that you need a million dollars in coverage, you might be nervous to see how much one of these policies is going to cost you, but don’t worry, they are much more affordable than most applicants assume. Several different factors go into calculating what your monthly premiums are going to be for the coverage, your age, health, zip code, the length of the policy, and much more. This means that each person could receive drastically different quotes based on their situation, but we can give you generic quotes to give you a rough idea of what you could pay for a quality insurance policy for one million dollars.
Average Costs of a $1 Million Life Insurance Policy Annually for a non-smoking, male receiving preferred rates:
As we mentioned, these numbers are only examples based on a healthy, non-smoking male, and is getting preferred rates. Depending on your specific circumstances, you could receive different rates, but as you can see, these plans are cheaper than you would originally think.
Getting a $1 Million Life Insurance Plan
Because the future is unpredictable, you never know what’s going to happen tomorrow, but having life insurance is an excellent way to plan for the worst. Your family would have the resources they need, and you will have peace of mind knowing they will be taken care of if anything tragic were to happen to you. Don’t leave your loved one’s financial security to chance.
If you have any questions about how much coverage you need or about million dollar policies, please contact us today toll free at 800-866-8780. Our agents will be happy to answer those questions and ensure that you’re getting the coverage that you need.