Luis Pazos 
A million dollars might sound like a lot for life insurance, and $3 to $4 million might seem outrageous. But these policies exist for a reason. For high-income earners or those aiming to protect their estate, large policies make sense. So, who needs a $3 million policy, and how much coverage are you looking for?
How Much Life Insurance Do You Need?
Most financial experts recommend life insurance coverage of 10 to 15 times your annual income. For example, if you earn $200,000 a year, multiplying that by 15 gives you the $3 million mark. Even someone earning $250,000 would need a policy in the range of $2.5 to $3 million. If you’re unsure, you can use a life insurance calculator to get a more specific amount based on your household’s needs.
The main goal of life insurance is to protect your family far into the future. A 10-year term policy might suffice, but if you’re younger, consider a 20 or even 30-year term if it’s feasible. Having a $3 million policy is for asset protection, not show. In many cases, a term life policy is more financially wise, allowing you to invest more towards wealth building.
Reasons You Might Need a $3 Million Term Life Policy
We’ve touched on asset protection, but here are additional reasons for such a large policy:
- Final Expense Coverage: This covers funeral costs, medical bills, and possibly long-term care expenses without insurance.
- Extra Expense Coverage: This covers unforeseen costs, such as ensuring your family can stay in your home or relocate if needed, and expenses like college tuition and weddings.
Given these unknowns, it’s crucial to discuss potential expenses. A financial professional or independent life insurance agent can help you navigate these considerations.
How Much Will a $3 Million Life Insurance Policy Cost?
Here are some sample rates:
| Age | Gender | Term | Amount | Premium |
|---|---|---|---|---|
| 30 | Male | 30 years | $3 million | $173.49 |
| Female | 30 years | $3 million | $133.69 | |
| 35 | Male | 20 years | $3 million | $95.47 |
| Female | 20 years | $3 million | $81.29 | |
| 40 | Male | 15 years | $3 million | $106.49 |
| Female | 15 years | $3 million | $92.49 | |
| 45 | Male | 10 years | $3 million | $138.17 |
| Female | 10 years | $3 million | $118.46 |
Another company’s rates for a non-smoking male:
| Age | Face Value | Premium |
|---|---|---|
| 30 | $3 million | $99 |
| 40 | $3 million | $150 |
| 50 | $3 million | $431 |
| 60 | $3 million | $1,231 |
| 70 | $3 million | $4,654 |
| 80 | $3 million | $14,138 |
These tables are illustrative, and actual costs can vary.
Underwriting a $3 Million Term Life Insurance Policy
Underwriting for a $3 million policy is like any other insurance policy. When I got my $2.5 million policy, I scheduled a paramedic exam. They took my height, weight, blood pressure, and samples of blood and urine for lab testing. The process is smooth and flexible with scheduling.
Financial Requirements for a $3 Million Policy
Life insurance companies don’t just take your money for these large policies. You have to verify your income. It’s suspicious if someone earning $25,000 annually wants a million-dollar policy. Younger people are generally more likely to get approved for larger policies, but most companies cap coverage based on your age.
Here’s a rough guide on maximum coverage by age:
| Age Range | Income Coverage Maximum* |
|---|---|
| 18 – 29 | 35x |
| 30 – 39 | 35x |
| 40 – 49 | 25x |
| 50 – 59 | 20x |
| 60 – 65 | 15x |
| 66 – 74 | 10x |
| 75 – 79 | 5x |
| 80+ | Varies by Carrier |
*Multiply these numbers by your gross income.
Laddering Your $3 Million Policy
Laddering life insurance, like laddering CDs or bonds, involves having multiple policies with different terms to save costs. For example, a 35-year-old executive with a $3 million need might get a $2 million policy for 30 years and a $1 million policy for 20 years. This ensures coverage until major expenses, like paying off a mortgage or children’s college, are managed.
Can You Qualify with Certain Health Conditions?
Your health and the insurance company you choose greatly impact your policy cost and approval. Even with similar health conditions, two applicants might face different outcomes from different insurers. Pre-existing conditions like cancer or heart disease will affect premiums and approval chances. If denied by one insurer, don’t give up; other carriers might offer coverage. Work with a qualified independent life insurance agent to navigate high-risk conditions.
High-Risk Condition Case Study
I worked with a man in his mid-70s who had heart surgery four years prior. Despite following his doctor’s advice, he faced multiple rejections for life insurance. By approaching various insurers, he eventually got the coverage he needed. Persistence is key, especially if your family is your reason for seeking coverage. A knowledgeable agent can make all the difference.
Factors affecting life insurance approval also include:
- Age
- Gender
- Health history
- Family health history
- Occupation
- Hobbies
- Drinking
- Smoking
- Weight
The Bottom Line – How to Buy a $3 Million Life Insurance Policy
Getting a $3 million life insurance policy requires balancing income, family needs, and future expenses. Experts suggest coverage 10 to 15 times your income. Costs vary based on age and gender, and laddering policies can optimize duration. Underwriting involves medical exams and financial checks, with health and carrier choice significantly impacting approval and cost. Persistence is crucial, especially for high-risk cases, to provide financial security and peace of mind for your family’s future.
