A coverage limit is the minimum to maximum allowable death benefit of an insurance policy. Based on how an insurance policy is underwritten will determine how the coverage limit will vary. Generally, the more time an insurance company takes to underwrite an insurance policy, the higher the amount of death benefit offered, and vice versa.
A fully underwritten insurance policy normally has a minimum coverage limit of $100K and a maximum coverage limit of $1M.
A partially underwritten insurance policy, also known as simplified issue insurance, normally has a minimum coverage limit of $5K and a maximum coverage limit of $50K.
An insurance policy that is not underwritten, also known as guaranteed issue insurance, normally has a minimum coverage limit of $5K and a maximum coverage limit of $25K.
Remember, these are normal coverage limits. Every insurance company sets their own specific coverage limit based on how much risk they are willing to take on. Please consult with your insurance agent or insurance broker to understand the coverage limit of an insurance policy you are considering purchasing.