If you are thinking about buying a term life insurance policy, there are a few things, does a million dollar policy comfortably fit into your budget and are you eligible for this policy amount, you should consider this before applying.
How much life insurance do you really need?
When it comes to life insurance, more is not always better.
The purpose of life insurance is to help financially protect your loved ones if you were to pass away. For that reason, it can be tempting to purchase as much coverage as possible. However, the beauty of something like term life insurance is that it’s designed to be budget-friendly. Part of maintaining that affordability is to ensure you have the right amount of coverage — not too little to where financial security is a concern and not too much to where you’re overpaying.
Fortunately, choosing the right policy can be pretty simple. Talk to your financial advisor today. See if they can show you an online life insurance calculator which will take into consideration income, age, debts, and family structure to help recommend a policy that perfectly suits your needs.
For example, the type of individual who might need a million dollar policy could be: A healthy 32 year-old woman who has two kids (2 and 4), a working husband, earning $200,000 annually and owns a home with 20 years left on her mortgage. At a home sales price of $1,320,000, let’s assume the mortgage debt is $1 million. On producer would recommend a 30-year, million dollar term policy, which will offer coverage until her year mortgage is paid off and the kids are adults. This policy would cost a little more than $150 per month. Small factors can change these numbers, it is based on the life insurance calculator that you use.
In the above scenario, it’s likely that both the wife and her husband will need individual policies to help financially protect each other.
What if my coverage needs change?
Did you know that many life insurance companies will let you reduce the amount of coverage you have? It’s true.
While increasing your coverage amount is usually subject to a new application and medical underwriting, decreasing your coverage amount is actually pretty simple.
Are you eligible for a million life insurance policy?
To apply for a million dollar policy, you will need to be eligible based on your age and income(s). Depending on your age, the maximum coverage that can be purchased is anywhere from 10x to 30x your income. For instance, this means that a healthy 30-year-old would need to earn at least $100,000 per year to be eligible for a $3 million policy.
Have you considered life insurance company ratings?
Life insurance companies receive ratings from third-party agencies, who independently analyze their financial strength and ability to fulfill its contractual obligations to pay out a policy.
When shopping for life insurance – no matter how much you’re purchasing – it’s important to research the ratings of the company you’re considering. Just as you’d do with any goods or products, you buy online. Most companies clearly (and proudly) display their ratings.