How Much Does a $1 Million Life Insurance Policy Cost?

The number may surprise you.

If you don't already have a life insurance policy in place, then signing up for one is a move you should definitely aim to tackle sooner rather than later. Without life insurance, you might leave your loved ones in a position where they struggle financially in the absence of your income.

But you don't just want to buy life insurance. You also want to make sure you have adequate coverage. 

Now, that can mean different things to different people. A good rule of thumb is to buy enough life insurance to replace 10 times your income and have enough money left over to pay off outstanding debts your loved ones would be responsible for in your absence.

So, let's say you earn $80,000 a year and owe $200,000 on a mortgage you hold jointly with your spouse. In that case, a $1 million life insurance policy is probably a good bet for you. 

But will a $1 million life insurance policy break the bank? Not necessarily. In fact, you may be surprised at how affordable it is.

What will life insurance cost you?

The amount of money a $1 million life insurance policy costs you will depend on a few different factors. These include your age, health, and the type of policy you buy.

As a general rule, the younger and healthier you are when you apply for life insurance, the more likely you'll be to snag an affordable rate on your premiums. For example, Forbes reports that the average yearly cost for a 30-year, $1 million life insurance policy is $780 for a male who applies at age 30. For a man who applies at age 35, that cost rises to $888. And at 40, it increases to $1,284. 

But even if you're fairly young, if you have known health issues, those could drive your premium costs up, because the company that insures you will think it's taking a bigger risk. If you're able to address a health issue that might otherwise be a red flag, like obesity, you may be rewarded with lower premiums. 

The type of policy you buy will also have an impact on cost. If you purchase a term life insurance policy, your coverage will run out at some point in time and won't accumulate a cash value. However, you're likely to snag a lower rate than you will with whole life insurance.

Whole life insurance is permanent coverage -- you'll be insured until the day you die. And, whole life insurance can accumulate a cash value, which you can take out or borrow against. But the cost of whole life insurance tends to be prohibitively expensive. So while whole life insurance has its benefits, you may find that you just can't swing it financially. 

Do your research

There's one other factor that could dictate what you pay for life insurance -- the insurance company you use. So if you're ready to get life insurance, shop around for quotes. You may find that one insurer is able to offer a lower rate than another, all the while giving you the same amount of coverage.