Most experts agree that many people need life insurance policies that are 10-15 times their annual income. In some cases, that benefit amount can exceed $1 million. But what happens when you own a successful small business, or your income level or assets require a life insurance policy that exceeds $10 million? What about a $20 million policy? Or even $50 million? In certain cases, you may require life insurance in amounts that feel excessive but are actually perfectly reasonable for your situation.
At SelectQuote, we can help you find life insurance that meets your unique needs. Whether you need a large policy to help provide your loved ones with a hefty financial safety net or to help safeguard business assets after your death, there are options. Let’s walk through when—and for whom—a $10-50 million life insurance policy makes the most sense.
Assessing Your Need for a Multi-Million Dollar Life Insurance Policy
A multi-million dollar life insurance policy is a specialized financial tool designed for high-net-worth individuals, business owners, and those with complex financial situations. This level of coverage is typically needed by small business owners, real estate moguls, hedge fund managers, and other professionals with significant assets and high-value estates. The primary drivers for such significant policies are often rooted in complex estate planning and business succession.
A substantial death benefit can provide the liquidity needed to pay significant estate taxes, preventing the forced sale of valuable assets like a business or real estate. It also serves as a critical component in buy-sell agreements, ensuring a smooth and funded transition of business ownership upon the death of a partner. Ultimately, a multi-million dollar life insurance policy aligns with the financial goals of preserving wealth and ensuring that a family's legacy and lifestyle are protected for future generations.
The Strategic Uses of High-Value Life Insurance
A $10 million insurance policy or a $50 million insurance policy can be used for several purposes, including standard life insurance needs like:
Covering final expenses
Paying down debt
Replacing income
Providing a financial safety net for the future
Business partnerships
Stock redemption
Divorce agreements
Intellectual property
Other use cases for insurance policies this large can include purchasing business assets or buying a new home. An experienced SelectQuote agent can explain how and when a large insurance policy makes sense for your needs.
The Costs of $10M, $20M, and $50 Million Life Insurance
Many factors, including your age, health history, and type of policy, determine the cost of your life insurance premiums. For example, a $10 million term life policy will likely cost less than a permanent (universal or whole life) insurance policy for the same amount. The most important practice when shopping for life insurance is to compare different life insurance rates and shop for several policies at once. If a $10 million life insurance policy is more expensive than a $1 million policy, rates for $20 or $50 million in coverage will be even higher. If you know you want or need $50 million coverage but hesitate because of the cost, consider buying this coverage as a term life insurance policy with guaranteed level premiums that you can fit into your budget.
The Qualification and Application Process for High-Value Policies
Qualifying for a $10, $20, or $50 million life insurance policy requires more information than smaller life insurance policies. There are typically coverage limits for life insurance policies to ensure that you’re not:
Buying more life insurance than you need
Covered for substantially more than what your risk level affords
You’ll likely need to prove a substantial source of income to justify the policy. You may also be asked to prove that having such a significant policy amount provides financial benefits to your beneficiaries. In addition to the financial qualifications, life insurance at these amounts will typically involve similar insurance underwriting practices. You’ll be subject to medical underwriting, including undergoing a medical exam. You will be asked about your health history, age, lifestyle habits, and other standard health questions. The younger and healthier you are when you apply for the policy, the better chance you’ll have of being offered more affordable premiums.
Choosing the Right Provider for Your High-Value Life Insurance
Choosing the right insurance provider for a high-value life insurance policy is a significant step that goes beyond simply finding the lowest premium. Since you're dealing with a significant amount of coverage and a long-term financial commitment, it's essential to select a carrier that is financially stable and has a proven track record. You should thoroughly vet potential carriers by examining their financial strength ratings from independent agencies like A.M. Best, Moody's, and Standard & Poor's. These ratings reflect the company's ability to meet its future obligations, providing assurance that your multi-million dollar policy will be paid out when the time comes. Furthermore, it's important to choose a provider with a strong reputation for customer service and extensive experience with high-value policies. A carrier that specializes in this market will have the necessary expertise to handle the complex underwriting process and offer tailored policy features that align with your specific financial and estate planning goals.
SelectQuote Can Help You Shop for Life Insurance—No Matter How High Your Coverage Needs Are
Shopping for life insurance policies shouldn’t be stressful. That’s true whether you need $1 million, $10 million, $20 million, or $50 million in insurance coverage. At SelectQuote, we can help you find the right insurance policy by comparing rates from several of the most trusted insurance companies at once.
