Securing a $5 million life insurance policy requires careful consideration, especially when choosing the right life insurer.
While the underwriting rate class and cost of coverage are important starting points, other crucial factors also deserve your attention.
This guide will help you select the best life insurance company for your needs, considering financial strength, policy types, and available riders to ensure your peace of mind and financial security.
Who Needs a $5 Million Life Insurance Policy?
A $5,000,000 policy may be needed for high-income earners, business life policies, foreign nationals, estate planning, or other high-net-worth individuals.
If you need this amount of coverage, this article provides everything you need to make an informed decision about life insurance.
Types of Life Insurance for Large Policies
It used to be that only universal or whole-life policies were offered for large policies of $5 million or more.
And while that may still hold true for some situations, many people can address their life insurance needs with cost-effective term life insurance.
If you look at term policies that offer a conversion privilege, you can get permanent insurance at a later date without going through medical underwriting again.
How Much is a $5 Million Life Insurance Policy?
Example – Male – CA Resident – $5 million term life insurance pricing as of 5-20-2024.
| Description | 10-year term | 20-year term | 30-year term |
|---|---|---|---|
| Age 35 | $892 (PB) $1241 (Pfd) $2343 (Std) | $1672 $2230 $3881 | $3360 $4128 $6868 |
| Age 45 | $2357 $3087 $5201 | $4682 $5674 $8898 | $8244 $10,131 $16,259 |
| Age 55 | $6770 $7987 $13,547 | $12,410 $14,481 $24,351 | $26,136 $31,050 $42,251 |
| Age 65 | $20,565 $24,867 $38,010 | $41,675 $49,883 $78,870 | N/A |
| Age 75 | $67,245 $83,535 $121,130 | N/A | N/A |
As you can see, pricing increases as you age or your health declines. Since our last price comparison in 2023, rates have increased significantly for those 55 and older.
Shopping Advice for $5 Million Dollar Policies:
- Use an independent agent to provide pricing for multiple companies.
- Combine multiple policies of various term lengths/durations to lower overall costs. This strategy is also known as laddering or staggering coverage.
- If you have health issues, you need a high-risk expert to get you to the right company.
Generally, getting your coverage in place while young and healthy is better.
Some companies like Banner Life can add multiple term lengths to one policy. With others, we would write multiple $1 million policies of various term lengths to accomplish your goals.
How to Qualify for a $5 Million Life Insurance Policy
When you apply for more significant policies, medical and financial underwriting rules become more strict.
The same rules do not apply to you as the risk to the insurance is more significant.
As a result, you’ll find that you may undergo additional underwriting requirements.
Medical Underwriting:
Many people enjoy the convenience of accelerated underwriting, but coverage amounts of $5,000,000 or greater don’t usually qualify for accelerated underwriting.
As part of underwriting, you’ll have a paramedical exam, and the insurance company will obtain your medical records from physicians.
Your policy is typically subjected to additional financial underwriting requirements, as we discuss in the next section.
Financial Underwriting:
In addition to increased medical requirements, financial underwriting may require substantiated proof of your insurance need.
For example, life insurance companies may require an electronic inspection report (EIR) for personal coverage, or underwriting may require loan documents for SBA loans or operating agreements if your coverage is for a buy-sell or key person coverage.
An electronic inspection report gives underwriters access to publically available information to evaluate your application better.
Consider using a trust for your more significant policies. It may provide flexibility for estate, personal, or business planning.
Top-Rated Life Insurance Companies for $5 Million Policies
How do you choose the best life insurance company for your $5 million dollar policy?
Life insurance almost always starts with the underwriting rate class you will qualify for and the price of the coverage.
From there, we can compare other attributes such as:
- Financial Strength Ratings of Life Insurers
- Types of Life Insurance Policies Available
- Life Insurance Riders Available
When you have good health, you’ll find that many companies offer similar pricing, so it’s just a matter of working through the best aspects of your policy.
When high-risk health issues are involved, wide discrepancies in pricing among life insurers are common.
Sometimes, clients have concerns about a specific insurance company’s financial strengths or ratings not being the best available, but the pricing is competitive.
In that case, we can hedge by writing some coverage by one company and placing the rest of the insurance with another company.
In my personal experience, I have placed upwards of $100,000,000 on one insured and used more than ten companies to accomplish the result.
FAQ
You have questions about $5 million policies, and we have the answers.
Getting Started: Your Next Steps to a $5 Million Life Insurance Policy
Work with an independent agent as they match you to the best life insurance company based on your needs vs. an agent representing only one company (Northwestern Mutual, Mass Mutual, State Farm).
As an independent life insurance agency, we offer a No Pressure, No Obligation life insurance service to provide you with the best rates available in the market.
With this size policy, it may make sense to set up your beneficiary as a trust. You may also want to review the settlement options to determine how the proceeds would be paid out.
Get a risk-free quote today.
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