You’ve decided to leave behind a sizeable life insurance benefit for your loved ones. you want it to be an amount that will cover the funeral, the house, the car, and even the bills for a long time. maybe you’re even in the upper middle class or wealthy tax bracket and need a large policy to cover the expenses associated with wealth transfers. Let’s say you’ve settled on $2 million as the amount of insurance you need for these goals. Now all you need to do is find out how much $2 million worth of life insurance costs!
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The short answer is “it depends on the type of life insurance policies.”
- A $2 million 20-year term life insurance policy costs just $1,218 in annual premiums; and the 30-year term costs $2,050 per year.
- A $2 million whole life insurance policy costs up to $31,400 a year with 20 years of premium payments; or $23,040 a year if you pay premiums for 30 years.
- A $2 million guaranteed universal life insurance policy (or gul) costs $10,848 in annual premiums, less than half the cost of whole life premiums.
- A $2 million variable universal life (or vul) policy costs $10,602 in annual premiums. however, you should consider the vul policy only if you know how to invest. If you don’t have much investment experience, you should stick to the gul policy.
regardless of policy type, be sure to always shop around with multiple companies or a digital broker like amplify, especially if you’re interested in iul, gul, and vul policies. they focus 100% on permanent life insurance policies (iul, gul and vul) and can get various quotes from their partner providers for you to compare and select the cheapest one for you:
how much is a $2 million dollar term life insurance policy?
If you’re looking for an affordable life insurance policy while you’re young, term life insurance is an attractive option. We have obtained quotes for $2 million in coverage from several major insurance providers. these quotes are all for a man in average health in his 30s.
The following table shows policies with a term of 20 years. As you can see, the average annual premium is about $1,200, or just $100 per month. This is a fixed rate premium, so it will not increase over the 20-year term of the policy. Click on the company name to read our full review of insurance companies.
As you can see, 20 years of coverage is very affordable. however, this term life insurance has an expiration date set at 20 years. Most policies will allow you to renew every five years afterward, but the cost of your policy could rise dramatically as you age and eventually become too expensive to maintain.
what if you want a longer term, say 30 years? it will be a bit more expensive. A 30-year term life insurance policy will cost a 30-year-old in average health about $2,000 a year or $167 a month. this is a fixed premium for the entire 30-year period.
The 30-year term provides an additional ten years of coverage at the fixed annual premium. As you can see, the cost is a bit higher, but that’s because some of the increases associated with age are built into these premium quotes.
Of course, you’ll probably be able to renew many of these policies every five years after the initial 30-year term. the costs will simply go up a lot with each renewal to offset the increased risk of covering an older person.
>>More: How Much Does a $10 Million Life Insurance Policy Cost?
how much does a $2 million whole life insurance policy cost?
If you don’t like the idea of insurance expiring after a set number of years or having to renew every five years, there are other options in permanent life insurance policies. the most popular, but also the most expensive, is the whole life policy.
Whole life insurance is an insurance policy that covers the policyholder for life as long as they have paid all premium payments. With this type of insurance, he will pay the premium over a set number of years. once all payments are made, your policy is considered paid. no further payments are required and you are still covered.
We have obtained whole life policy quotes from the two accredited providers for $2 million in death benefits. all of these are policies with a payment schedule of 20 or 30 years from ages 30 to 60. they also provide $2 million guaranteed coverage until the policyholder turns 100.
penn mutual whole life requires 30 years of premium payment at $23,040 per year, making the total 30-year premium $691,200, to pay a $2 million death benefit to your beneficiary each time you die before 100 years. that’s a 2.9x return on investment if you consider it to be an investment for your loved ones.
Mass Mutual’s 20 WL leg offers better value with 20 years of premium payments of $31,400 per year, bringing total 20-year premiums to $628,000. With a death benefit of $2 million for your beneficiary when you pass away, it’s a 3.2x return on investment.
both seem like a good investment if you can afford it. however, is it really the best option if you want a permanent policy that pays $2 million to your beneficiaries when you die?
We don’t think so. The universal life insurance policy, whether guaranteed universal or variable universal, offers a much cheaper alternative with the same benefits.
>>More: Why Whole Life Isn’t Worth It?
how much does a $2 million guaranteed universal life insurance policy cost?
We also got quotes for a $2 million guaranteed universal life insurance policy and below are the 4 cheapest quotes. Guaranteed Universal Life insurance also offers a permanent, guaranteed death benefit, in this case $2 million. and we designed the policy to allow the policyholder to pay all premiums for only 30 years, between ages 30 and 60.
The main difference between the guaranteed universal life insurance policy and the whole life insurance policy is that the guaranteed universal life insurance policy does not offer a cash value account. So if you’re also looking to have access to your cash value account in case you need it later, guaranteed universal life insurance isn’t the best option for you. If you are only looking for the permanent and guaranteed death benefit, it is the best option for you since it is only half the price compared to whole life insurance.
The 4 cheapest quotes on a $2 million guaranteed life insurance policy is around $11,000 in annual premium and pays for 30 years. The cheapest quote comes from Protectiva Life with its UL Protectiva Lifetime Warranty. This means that you will pay $330,000 over 30 years and your beneficiaries will receive $2 million each time you die. that would generate a 6.1x return on your “investment”, which is a great return if you choose to view it as an investment for your loved ones.
Be sure to compare multiple quotes to select the cheapest one for you. working with a digital broker specializing in gul policies such as amplify is a good option:
>>More: Universal Life Insurance Case Studies
how much does a $2 million variable universal life insurance policy cost?
Guaranteed Universal Life is a great option, as is Variable Universal Life. People typically purchase a variable life insurance policy when they want to maximize cash value account growth and plan to withdraw to supplement their retirement income. They can invest the cash value account in assets with higher returns and higher risks.
Several insurance companies have recently offered a permanent, guaranteed death benefit as a component of a variable universal life policy, making it an attractive option.
We also obtained variable universal life insurance policy quotes for a $2 million guaranteed death benefit up to age 100. Below are the 4 cheapest quotes.
The quotes are quite comparable with universal guaranteed policies’. In addition to the $2 million guaranteed permanent death benefit, the Variable Universal Life policy will allow you to access a cash value account. however, you should only choose a variable universal policy if you know how to invest for yourself.
>>more: differences between variable life insurance (vli) and variable universal life insurance (vul)
a quick comparison between the different policy types
If you purchased a Secure Financial Vulnerabilities Defender policy and made 30 years of payments at $12,070, you would end up paying the insurance company $362,100 with a guaranteed death benefit of $2 million. Plus, you’ll continue to be covered until you’re 100 years old, even after premium payments end. Even if you outlive this policy, you’ll get the cash value that also built up in the policy over time.
Comparing this to the symetra 4.0 term life insurance policy in the second table, you would pay about $1,998 annually for 30 years, ultimately paying about $59,940. so it’s considerably less, but your life insurance will expire after 30 years and you won’t get any cash value back
In short, when you just look at the cost of premium payments over the years, term life insurance is much more affordable compared to a permanent life insurance policy. On the downside, you’ll only get coverage at that fixed rate for the term life insurance policy’s stated period. If you can renew your policy at the end of those 20 or 30 years, it will only be for five years at a time. your premium payments will almost certainly increase as well.
a vul or a gul are the products that will provide you with the best rates on permanent life insurance. however, they are still quite high compared to term life insurance. These life insurance policies also do not need to be renewed after the premium period ends. they are paid for and your insurance covers you until you are 100 years old.
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