Million Dollar Life Insurance Policy

Why A Million Dollar Life Insurance Policy is Needed?

Large life insurance policies are need if you are working spouse and you wish to leave your spouse with enough money to pay all debt obligations, provide a comfortable living without selling all your assets, and to get the kids through college without racking up huge financial loans.

If you are a high net worth individual, then you will need the million dollar life insurance policy to cover estate taxes. One of the major benefits of owning life insurance is the ability to generate large sums of money that would be payable to your heirs if you were to die.  This cash accumulation can transfer to your beneficiary federal income tax free.  Although they may pass income tax free, they still may be included in your estate for estate tax purposes.

How would you feel if you could pass your entire estate federal income tax free to your heirs? While this scenario is highly unlikely, there are many smart decisions you can make today to avoid significant future tax consequences.  We can show you ways to reduce the taxes on your estate thus enabling your heirs to benefit. The options we can provide are exclusively for those who can benefit from purchasing a million dollar life insurance policy or any amounts in excess this figure.

Why Is It Important To Have The Right Amount of Life Insurance?

If you considering an insurance policy in excess of $1 million, there are things you need to know in order to calculate the the correct amount. No one wants to be under insured or over insured for that matter. First you need to assess all  your current outstanding financial obligations, spouse or partners income needs, education needs for minor children, final expenses, and your income which is the basis for the insurer to determine the insurable need.

So here’s the formula:   Debt + final expenses + (8 x income)

Let’s take an example – let’s assume your mortgage, loans, and credit cards total $300,000 and the final expenses for a burial will be $15,000 and your annual income is $150,000. Now let’s do the math:

$300,000 + $15,000 = $315,000 + (8 x $150,000)

$315,000 + $1,200,000 = $1,515,000

Based on the above example, you would need ~ $2 million dollar life insurance policy. The next item you need to determine is what type of insurance is needed, a term or a permanent policy.

What Type of Life Insurance Policy is Right For Me?

Let’s first discuss TERM LIFE INSURANCE which in the short term is the least expensive allowing you to purchase large sums of insurance without breaking the bank. Term insurance is similar to renting. You purchase the life insurance for a specific term, such as 10, 15, 20, 25, or 30 years which is the maximum term policy available. Once the policy term expires, you will have to qualify again for a longer term which also being much older. With term insurance you loose out on the opportunity to lock into a policy for durations longer than 30 years. Depending on your age, 20-30 year term policies may not be available to you. Another disadvantage of term insurance is paying for the policy over the term and you outlive the policy. If outliving your term life insurance policy is a major concern, then a permanent life insurance policy can be an alternative.

Sample Million Dollar Life Insurance Rates:

The above rates are based on super preferred non-smoker 20-yr term. Actual rates may vary according to age, health, sex, and state of residence. To get life insurance rates indicative of what you may pay, please click on the link below for an actual quote.

A WHOLE LIFE INSURANCE or UNIVERSAL LIFE INSURANCE policy provides permanent coverage in which can last your entire lifetime. These permanent life insurance policies have a cash accumulation value that may be available in the future and can be borrowed against. While a permanent policy may cost more than a term policy initially, the long term benefits may outweigh the cost.

If you are still unsure which life insurance policy type is best for you, please give us a call for expert unbiased guidance or click the link below.

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