When does a million dollars in coverage make sense?
Everyone does not need a life insurance for a million dollars, but it can make sense in many family situations.
Let's look at a common scenario where a million dollars Life insurance is meaningful and then we share the costs.
Example: Married couple with four children and a house
John and Jane Smith each earn about $ 60,000 a year. They have four children and live in a five-bedroom home with a $ 400,000 mortgage.
If one of the parents died, their desire would be to minimize the disruption by having enough coverage to take care of the mortgage, so the surviving spouse and children do not have to move.
Another wish would be to take care of higher education for all four children. Depending on the state and whether it is public or private, the average total cost can range from $ 154,400 to $ 535,660.
Using the life insurance needs calculator on Quotacy, here are some of the factors and costs used to determine how much life insurance coverage John and Jane need.
They want their life insurance to:
- Cover a funeral: $ 10,000  Mortgage Pay: $ 400,000
- Replace Lost Income: $ 0019,019 for children against $ 500,019  $ 155,000
Based on these figures, the proposed coverage amount for each would be $ 1,200,000.
In this example, we did not include additional debt, current savings and investments, or if they have a life insurance policy that they plan to keep. These factors can significantly affect the amount of dollars needed.