$5 Million Life Insurance Policy – What to Consider Before You Buy

By Michael Horbal - Updated on 08/12/2023

If you need a $5 million life insurance policy for personal, business, or estate planning, the following are some of the most common questions we receive:

  1. Cost – How much will $5 million of life insurance cost me?
  2. Qualifying – What income level, net worth, and financial reason do I need to qualify?
  3. Underwriting – What is the underwriting process for this size policy?
  4. Security – What are the ratings and financial strength of the company I am considering?
  5. Products – What types of policies, riders, and alternatives are available for my life insurance needs?

How Much is a $5 Million Term Life Insurance Policy?

Example – Male – $5 million term life insurance pricing as of 5-15-2023

Description10-year term20-year term30-year term
Age 35$893 (PB)
$1242 (Pfd)
$2343 (Std)
Age 45$2349
Age 55$6580
Age 65$19,370
Age 75$65,000
Quotes are for a male, annual premium for $5,000,000 of coverage at Preferred Best(PB), Preferred (Pfd), and Standard (Std) rates. Companies quoted include AIG, Banner Life, Symetra, and others – as of 5-15-2023

As you can see, pricing increases quickly as you age and/or your health declines.

Shopping Advice for $5 Million Dollar Policies:

  • Use an independent agent to provide pricing for multiple companies.
  • Consider combining 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 speaking, 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 policies of various term lengths to accomplish your goals.

Qualifying for $5,000,000 of Life Insurance

When you apply for more significant policies, medical and financial underwriting change.

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.

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.

For larger policies, it is also a good idea to consider using a trust for your policy as it may provide flexibility for estate, personal or business planning.

Which Life Insurance Company is Best for Large Life Insurance 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:

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, we can end up with a wide discrepancy in pricing that needs to be explored before deciding on the best company.

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 where maybe some coverage is written by one company and the rest of the insurance is placed 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.

Final Thoughts on Large Life Insurance Policies

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.

Get a risk-free quote today.

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