What a $1,000,000 Life Insurance Policy Costs Depends on Your Situation

How much does a $1,000,000 life insurance policy cost per month?

A $1,000,000 life insurance policy has no single monthly price. The cost depends on the policy type, the length of coverage, your age and health, and how the insurer underwrites your application.

This guide explains each cost driver in plain words. It also covers the Florida rules and tax points that affect the policy after you buy it.

NR CPAs & Business Advisors is a CPA firm in Miami, Florida. Insurance is offered by Nischay Rawal, a licensed insurance agent, separately from the accounting practice.

Does term or permanent coverage change the monthly cost?

Yes. The policy structure is the biggest cost driver. Colorado’s Division of Insurance notes that term life insurance is typically less expensive than cash-value policies. The reason is that cash-value premiums also fund the cash value.

Term coverage lasts for a set number of years and has no cash value. Oregon’s Division of Financial Regulation explains that permanent coverage can stay in force as long as premiums are paid. It also has a cash-value account.

South Carolina’s Department of Insurance explains that whole-life coverage builds cash value. That cash value can be borrowed against or cashed out. Those features are part of why the monthly cost is higher.

Comparing the two types takes more than comparing monthly amounts. FINRA’s guidance on exchanging a life insurance policy points to surrender charges, cash value and policy replacement as factors to weigh.

How do age and health affect the monthly cost?

Age and health are the next biggest factors. Premiums generally rise with age at issue. Insurers review your health history before they set the rate.

Health questions are part of the application. Issue may depend on insurability. The insurer’s decision and the rate both depend on what it finds.

Accurate facts matter. That calculation uses the insurer’s rate on the issue date.

How does the payment schedule affect cost and coverage?

Your payment schedule changes your monthly outlay. It also changes what happens if a payment is late.

Florida law requires a grace period. Fla. Stat. § 627.453 says every insurance contract must give at least 30 days to pay any premium after the first. The policy stays in force during that period.

For some older policyowners, Florida adds a notice step. Fla. Stat. § 627.4555 provides that a life insurance contract issued or issued for delivery in Florida on or after October 1, 1997, that covers a natural person aged 64 or older and has been in force for at least 1 year may not be lapsed for nonpayment of premium unless, after the grace period expires and at least 21 days before the effective date of any such lapse, the insurer has sent a notification of the impending lapse in coverage to the policyowner and to a secondary addressee designated in writing by name and address. For a policy that provides a grace period of more than 51 days, that notification must instead be mailed to the policyowner and the secondary addressee at least 21 days before the grace period expires. The policyowner may designate a secondary addressee when applying for the policy, on a form the insurer provides, and at any time the policy is in force, by sending the insurer written notice with the secondary addressee’s name and address. The section does not apply to a contract under which premiums are payable monthly or more frequently and are regularly collected by a licensed agent or are paid by credit card or by a preauthorized check processing or automatic debit service of a financial institution.

Incontestability also has a time limit. Fla. Stat. § 627.455 says a policy becomes incontestable after it has been in force during the insured’s lifetime for 2 years from its date of issue. Fla. Stat. § 627.455 reads: “Every insurance contract shall provide that the policy shall be incontestable after it has been in force during the lifetime of the insured for a period of 2 years from its date of issue except for nonpayment of premiums and except, at the option of the insurer, as to provisions relative to benefits in event of disability and as to provisions which grant additional insurance specifically against death by accident or accidental means.” The exception for nonpayment of premiums still applies.

What is the tax and estate view of a $1,000,000 policy?

A death benefit is generally not counted as income to the beneficiary. Under IRC § 101, gross income does not include amounts received, whether in a single sum or otherwise, under a life insurance contract if such amounts are paid by reason of the death of the insured, except as otherwise provided in the section, including the transfer-for-value and later-payment rules.

Estate tax is a separate question. IRC § 2042 provides that the value of the gross estate shall include the value of all property to the extent of the amount receivable by the executor as insurance under policies on the life of the decedent, and to the extent of the amount receivable by all other beneficiaries as insurance under policies on the life of the decedent with respect to which the decedent possessed at his death any of the incidents of ownership, exercisable either alone or in conjunction with any other person. IRC § 2042 reads: “For purposes of the preceding sentence, the term “incident of ownership” includes a reversionary interest (whether arising by the express terms of the policy or other instrument or by operation of law) only if the value of such reversionary interest exceeded 5 percent of the value of the policy immediately before the death of the decedent.” The first is insurance receivable by the executor. The second is insurance receivable by other beneficiaries when the decedent held incidents of ownership at death. IRC § 2042 reads: “For purposes of the preceding sentence, the term “incident of ownership” includes a reversionary interest (whether arising by the express terms of the policy or other instrument or by operation of law) only if the value of such reversionary interest exceeded 5 percent of the value of the policy immediately before the death of the decedent.”

The IRS sets the 2026 basic exclusion amount at $15,000,000 for estate and gift tax. See IRS Revenue Procedure 2025-32. Whether a death benefit counts toward the gross estate depends on facts such as who owns the policy.

What should business owners know about cost?

Business coverage is built around a specific purpose. Key person and buy-sell coverage are two common examples.

Florida law allows a buy-sell party to insure another party’s life. Fla. Stat. § 627.404 says a party to a contract for the purchase or sale of an interest in a business entity has an insurable interest in the life of each other party. That interest applies for the purpose of that contract only.

The same statute says an insurer may rely on the applicant’s statements about insurable interest. The insurer is not liable, except as set forth in the policy, for untrue statements it relied on in good faith. Accurate paperwork protects both sides.

Coverage amounts for business policies are often tied to the terms of the business agreement. Cost follows from the amount, the structure and the insured’s age and health.

Next steps for families and business owners

Families in Miami, Fort Lauderdale, Orlando, Tampa and Jacksonville face the same cost drivers. Florida’s grace period and incontestability rules apply statewide.

Start by listing the purpose of the coverage. Note who depends on the income, who owns the business interest and how long the need will last. Those facts shape the policy type and the cost.

Frequently asked questions

Talk with a licensed agent about your numbers

If you’re weighing a $1,000,000 policy for your family or your business, the cost depends on your own facts. Request a coverage review with NR CPAs & Business Advisors at our contact page. Nischay Rawal, a licensed insurance agent, will walk through the options with you.