This article includes links which we may receive compensation for if you click, at no cost to you.
If you’re considering taking out high-value life insurance (such as a $2 million to $5 million policy), there are a few things you need to think about. The first is your motivation for taking out such high-value life insurance – and the second is knowing in advance how much you can expect to pay in premiums so that you can be prepared for such expenses.
There are several different types of high-value insurance policies on the market – which is why you need to know quite a bit about high-value life insurance before you start shopping. It’s also important to sift through each option so that you can choose the best one that helps you achieve your goals.
Here’s everything you need to know about $2 million to $5 million life insurance policies.
IN THIS ARTICLE:
Why Purchase A $2 Million To $5 Million Life Insurance Policy?
Life insurance is the ultimate way to protect your loved ones when you are not around to do so anymore.
It takes the pressure off your shoulders because you know your family will be taken care of financially should the worst happen (and the fact that you can buy life insurance online makes things so much easier).
Who Needs a Multi-Million Dollar Life Insurance Policy?
When buying life insurance, it’s essential to make sure you get enough coverage. However, a large life insurance policy might not the best choice for everyone. Even if you can afford the monthly payments, it doesn’t mean you really need it.
That said, some people can actually benefit from high-value life insurance – for example, if you know your family will need that amount of money. Getting a high-value life insurance policy can be an excellent investment too. If you make a nice income and can afford the premiums for $5,000,000 in life insurance coverage, your family can get a high return on your investment.
Understanding the reasons why will also help you during the insurance application process, more so when going above the $5 million ceiling. It will also help you know which type of insurance will best fit your needs and portfolio, so it’s a question well worth the time invested in it.
Is Getting $2M – $5 Million of Life Insurance Coverage Worth It?
High-value life insurance can sound like a perfect idea. We all want only the best for our loved ones. If you can afford a $5 million life insurance policy, you need to figure out whether it’s worth it. When calculating how much life insurance you need, calculate your assets, family needs, and other expenses.
Here are the most common reasons why people get 2 to 5 million life insurance policy:
Large estate tax:
You don’t want to leave your family members stuck with high tax bills
Your family might have recurring expenses that they could not cover without your income
You don’t want to leave your family in substantial debt in case you are not there to take care of your business
If you know your loved ones will need an inheritance, especially if you leave members with special needs.
Calculate how much you will pay over your estimated life expectancy and calculate the possible return on your investment.
$5 Million Whole Life Insurance vs. $5 Million Term Life Insurance
Life insurance available through different types of policies. The most common life insurance policies are term and whole life insurance.
Whole Life Insurance is More Expensive
Whole life insurance coverage lasts for as long as you are alive, but it’s the more expensive choice. Its premiums are much higher than term life insurance. When getting a 5 million dollar whole life insurance policy, the premiums will be significantly higher.
The upside of getting whole life insurance is that your premium rate will not change, and your death benefit is guaranteed. You can be sure your loved ones will be financially protected once you are gone.
Term is More Affordable but Temporary
Term life insurance coverage lasts for a fixed period (usually 10, 20, or 30 years), and is much more affordable in the grand scheme of things. It can also be the best choice if you are only looking for temporary protection. This can be the case if you have small children and want to protect them until they graduate college or until your partner retires.
The downside of term insurance is that should you want to extend it once the term is finished, the premiums will increase multiple times.
Sample Quotes for a $5 Million Dollar Life Insurance Policy
Life insurance premiums depend on many factors. One of the biggest factors is your age; the younger you are, the less you will pay monthly. Another factor is the duration of your policy.
The most common life insurance policy term is 20 years, but you can also choose a shorter or longer term. A 10-year term will cost you less while the whole life insurance is the most expensive one.
Gender is a factor as well – men will generally pay more in premiums than women since women are expected to live longer. The rest will depend on your health and lifestyle.
Here’s what a healthy, non-smoking male could expect to pay for a 20-year term life insurance policy worth $5 million:
- A 30 year old male could expect to pay $162 / month.
- A 40 year old male for the same policy would pay $246.
- A 50 year old male would pay $714 per month.
- A 60 year old can expect to pay $2,059 every month.
Since most companies do not offer a 20-year term life insurance policy for people over 75 years old, guaranteed universal life insurance might be the best choice in this case, with the monthly premium reaching as much as $23,560 for an 80-year-old male.
How to Get Approved for A $5 Million Term Life Policy
Not everyone can get a $5 million term life insurance policy. There are few factors insurance companies will check before approving you for the coverage you wish.
First of all, they will check your age and your income. The younger you are, the higher coverage you can expect to qualify for. For people aged between 18-40 years old, coverage can be 25 times the gross income. If you are in your 40s, you can get as much as 25 times your gross income, in the 50s – 20 times, and when you reach age 60, it goes down to 15 times. For people over 66 years old, insurance companies can offer coverage of 10 times their gross income, dropping to 5 times gross income for those over 75 years of age.
Some health problems might not influence whether you can qualify for $5M term life insurance. These are medical conditions that can be controlled, such as diabetes, high blood pressure, or cholesterol. If you have a medical condition that can’t be controlled with medication, such as cancer or a recent heart attack, you might not be able to get a $5M term life insurance.
The insurance company will also look into your lifestyle and occupation. You might not qualify if your job increases associated risks, or you are into extreme sports.
Can I get a $10 million life insurance policy?
$10 million life insurance policies do exist, but you will need to qualify to get it. Getting a $10 million life insurance policy is very different than getting a lower value one.
While lower value life insurance can be done all online and within minutes, if you decided to get a 10 million dollar life insurance policy, be prepared for a long process and many documents. The documents required will depend on the reason you provide for such large coverage.
Different insurance companies might have a different approach to this, but there are primary factors that are usually taken into consideration, including:
- Affordability: To get a $10 million life insurance, you will have to afford the premiums that come with it
- Health conditions: You might not qualify if you have an uncontrollable health condition such as cancer
- Age and gender: When calculating your life insurance maximum, age and gender are key factors
- Purpose: Even if you pass all the factors above, you will need to provide the purpose of such high coverage
What is the highest life insurance policy?
There is usually no limit on the maximum whole life insurance coverage. Some insurance companies can set maximum amounts, while others don’t. Insurance companies will gladly offer you a high-value life insurance policy because your premiums directly depend on the value of your policy. This does not mean that you can get as much insurance as you want.
There are many factors that an insurer will examine before offering you a policy. Some of the world’s most wealthy people have life insurance worth several million with the highest life insurance policy registered in Guinness World Record is of $201 million.
Different insurance companies might have different rules and limits for their life insurance policies. It is always the best idea to talk to a few different companies and agents to find one that can offer you as much life insurance as you need.
Getting a $2 Million to $5 Million Policy is Worth It (but it isn’t for everyone)
A $2 to $5 million life insurance policy is not for everyone. You need to consider whether getting such an insurance policy is in the best interests of your financial health and that of your family and other dependents who may benefit. While it is reassuring to know that your family will receive such a substantial amount of money once you are gone, will they really need that much money?
Of course, there is no price one wouldn’t pay to ensure the safety of their family – that’s a given. But you also need to make sure that it doesn’t make you suffer financially in the present.
If you do opt for high-value insurance, first decide the type of insurance that will best fit your needs, then look at premiums from different companies to understand if you can afford them. Look at the factors that are taken into consideration and see if you can lower the risks to make the premiums more manageable.
If the conditions are right, getting a $2 million to $5 million insurance policy can definitely be worth it. When it is all said and done, there is no better feeling than knowing you will continue to be able to provide long after you are gone.