Are you crazy for wanting to buy a $2 Million Dollar Life Insurance Policy?
This often not discussed coverage amount has been neglected for too long.
What is the Same - What is Different.
The $2 Million Dollar Term Life Insurance policy used to be considered an excessive amount. No longer, while consumers are pulling in more and more income the need for higher amounts of simple and affordable term coverage has increased. The need to focus on A+ and A++ carriers is increased with this higher dollar coverage amount.
Who Needs a $2 Million Dollar Life Insurance Policy?
A two million dollar life insurance might seem like an insane amount of insurance, but the truth is, its not really. Especially to people that live in more affluent areas, such as the New York Metro area, Los Angeles, the San Francisco Bay Area, Miami, Chicago, Etc.
But the candidates for two million dollars of life insurance is not at all limited to these areas. As wages grow so does the need for more coverage.
If you are following the old 'ten times earning rule', than anyone making $200,000 per year, might need a $2,000,000 level term life insurance policy. Anyone that has a mortgage of $2 million plus dollars may also be inclined to want a life insurance policy for this amount. There are all sorts of various life insurance calculators that you can use to assist in coming up with this calculation.
The ten times life insurance rule is admittedly a crude tool for deciding how much life insurance to buy.
What Is The Ten Times Earning Rule?
The Ten Times Earning Rule is a Rule of thumb that allows people to quickly estimate potentially how much life insurance they might just need.
As an Example:
Someone that Makes $50,000 per year, May need 10 Times this or $500,000 in Term Life Coverage
Why Buying a $2 Million Dollar Life Insurance Policy is Different:
When shopping for this much in insurance, often the internet may be the best place to look. Believe it or not.
But solely relying on information online may lead you astray. The higher the dollar figures the more complex underwriting will become.
Although helpful for lower amounts of coverage, there are several reasons why shopping for a $2 Million Term policy is extremely different:
A two million dollar life insurance might seem like an insane amount of insurance, but the truth is, its not really.
How to Calculate How Much the cost of a $2 Million Dollar Life Insurance is:
Buying higher dollar life insurance amounts as we have stated is not nearly as simple as lower dollar amounts. Therefore its often not possible to get a simple estimate by looking online. Therefore here are some general life insurance quotes, all at the $2,000,000 amount, all term life policies.
Here are some $2MM Term Life Sample Rates:
10 Year Term Life Insurance, $2,000,000 Death Benefit, California
Male, Aged 40, Non Smoker Preferred Plus, No Health Issues
Prices Ranging from $605 to $955 per year
20 Year Term Life Insurance, $2,000,000 Death Benefit, California
Female, Aged 40, Non Smoker Preferred Plus, No Health Issues
Prices Ranging from $955 to $1,289 per year
25 Year Term Life Insurance, $2,000,000 Death Benefit, California
Female, Aged 40, Standard Non Smoker, Some Health Issues
Prices Ranging from $2,964 to $3,211 per year
25 Year Term Life Insurance, $2,000,000 Death Benefit, California
Male, Aged 40, Standard Non Smoker, Some Health Issues
Prices Ranging from $3,744 to $4,136 per year
Great Candidates for $2,000,000 in Life Insurance:
The working Dad living in Washington DC, that has three kids and earns $220,000 per year on average. His wife does not work and depends on him for all their income.
The working widowed Mom living in Chicago, who makes $250,000 per year and has two children. Since her husband passed away over five years ago, she is financially all by herself
Both working parents who live in Connecticut. She earns over $400,000 per year and he $300,000 per year. They have three children from different marriages and their overall financial situation is extremely complicated.
The Single woman that lives in Los Angeles with no children. She is a semi famous actress whose income fluctuates tremendously from year to year. Some years on the low side of $400,000 and other yeas she makes in excess of $650,000. Her home is valued at $4,200,000 and carries a $2,300,000 mortgage on it. Since her brother also lives with her in a sub unit, she wants the house to be paid off in the event of her death. She does not have enough money saved off to do this without insurance.
That is not by any means and exhaustive list of $2,000,000 term life candidates. There are just so many more.
How to Buy a $2 Million Dollar Life Insurance Policy:
Buying a policy this large is complicated and it is usually best that you follow a couple of best practices:
- Only work with experienced life insurance agent.
- Stay away from a Captive Insurance agent and instead work with an Independent Agent that can offer you quotes from lots of different insurance companies.
- Before you start the process, compute what you can afford to pay per year.
- Complete a full pre health screening. Ask about how your job and all of your hobbies can change your life insurance rates.
- Review with your insurance agent all of the potential carriers. Check the Financial Strength Rating and Policyholder Surplus of each and every one.
- Make sure that you are giving 100% completely accurate answers to your insurance agent.
- Make yourself available for the paramedical exam as soon as possible.
- Do not buy any form of life insurance that you do not understand.
- Don't sign anything that you do not understand.
In this short article about buying multi million dollar life insurance policies, mostly we have avoided the debate about what type of life insurance to buy: Whole, Universal, or Term Life. Frequent readers of my site will certainly know that I believe that Whole Life Insurance for certain five or six reasons, but in general I find that it will not make mathematical sense.
Since this article is about people needing two million in life insurance it may be a situation when the client is considered to be affluent. Affluent clients can theoretically decide to purchase a whole life insurance policy and come out ahead. However, although this so called sales pitch is attempted often, it too is fraught with ruined financial balance sheets. I would advise most of my clients to be extremely careful purchase a whole life insurance policy, even from an A++ rated company for any purposes other than pure insurance.
Why Clients Should Consider a $2 Million Dollar Life Insurance Policy:
There are numerous reasons for people to consider buying a large life insurance policy such as a two million dollar policy. The most popular reason is typically to assist in financially supporting loved ones, such as Wives and Children. Sometimes the necessary coverage can be used to pay off a loan on a home. In the end a $2,000,000 life insurance policy will likely assist in putting your mind at ease.
Thanks for reading our article about a $2,000,000 life insurance policy.