$5 Million Life Insurance Policy: How Much It Costs & Who Needs One – Policygenius (2024)

What is $5 million life insurance?

A $5 million life insurance policy can be any type of life insurance with a coverage amount of $5 million. This means that if you die while the policy is active, your beneficiaries can file a claim for $5 million.

Who needs a $5 million life insurance policy?

If you’re making $250,000 or more per year, you may need a $5 million life insurance policy to keep your loved ones from financial hardship if you die. You should have enough coverage to help your family cover the cost of living and other necessary expenses.

You can estimate how much coverage you need by factoring in expenses like:

  • Outstanding debts

  • The amount left on your mortgage

  • Your income multiplied by the number of years your family will depend on it

  • The cost of children’s education

Even if you’re a high-income earner who’s saved enough money to cover your family, it often makes sense to pay a nominal premium for insurance — just as you would insure your house, car, or other assets.

High-net-worth individuals can also use life insurance to:

  • Offset estate taxes if your estate will be valued over $12.92 million [1]

  • Provide a tax-free inheritance to your loved ones

Everyone’s financial situation is different, so it’s best to work with a financial advisor or a life insurance professional to assess your needs.

→ Learn more about how to calculate how much life insurance you need

Who can qualify for a $5 million life insurance policy?

If your financial obligations add up to $5 million or more, you’ll likely qualify for a policy with that amount of coverage.

Most insurance companies use income multipliers to determine how much coverage you can buy. Usually, the younger you are, the more coverage you can get.

  • For example, if you’re in your 20s or 30s, you may qualify for a death benefit up to 30 times your income.

  • If you’re in your 60s, you can apply for up to 10 times your income.

Below is an example of how insurance companies use income multipliers for each age bracket. Each insurance company has slightly different guidelines.

Age

Maximum coverage amount

18 to 40

25x to 30x annual income

41 to 50

20x annual income

51 to 60

15x annual income

61 to 65

10x annual income

66 and above

6x income

So, if you’re 40 years old and making $250,000 annually, a $5 million policy is 20 times your income. Therefore, you’d be able to qualify for a policy with this coverage amount.

What types of policies offer a $5 million payout?

Term life insurance and permanent life insurance — the two main types of life insurance — can both offer payouts of $5 million.

  • Term life insurance is one of the most common life insurance options on the market. It lasts for a set number of years and doesn’t come with any complex tax restrictions or regulations. Term life is significantly cheaper than permanent life insurance. It’s an efficient way to provide a financial safety net for your family.

  • Whole life insurance — one of the most popular types of permanent life insurance — can be an option for people looking to use life insurance to diversify their investment portfolio, or those with permanent financial needs, like dependents who require lifelong care or specific estate planning goals. Whole life is much more expensive than term life, since it doesn’t expire and it also comes with a cash value component that gains interest at a set rate.

  • Universal life insurance is another popular type of permanent coverage. It offers more flexibility because you can increase or decrease how much you pay toward premiums, and you can eventually use your cash value to cover your premiums entirely.

A financial planner or insurance agent can help you determine which type of life insurance is best for you. If you have a high net worth, you might need a combination of both term life and permanent life insurance.

Ready to shop for a $5 million life insurance policy?

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Best companies for a $5 million life insurance policy

The best life insurance company for you will depend on your unique circumstances. Below are a few Policygenius partners that can be ideal if you’re applying for multi-million-dollar life insurance policies.

$5 Million Life Insurance Policy: How Much It Costs & Who Needs One – Policygenius (1)

2024 Policygenius award winner

Pacific Life

$5 Million Life Insurance Policy: How Much It Costs & Who Needs One – Policygenius (2)

$5 Million Life Insurance Policy: How Much It Costs & Who Needs One – Policygenius (3)

$5 Million Life Insurance Policy: How Much It Costs & Who Needs One – Policygenius (4)

Policygenius rating

Our proprietary rating methodology takes multiple factors into account, including customer satisfaction, cost, financial strength, and policy offerings. See the "methodology" section for more details.

$5 Million Life Insurance Policy: How Much It Costs & Who Needs One – Policygenius (5)$5 Million Life Insurance Policy: How Much It Costs & Who Needs One – Policygenius (6)$5 Million Life Insurance Policy: How Much It Costs & Who Needs One – Policygenius (7)$5 Million Life Insurance Policy: How Much It Costs & Who Needs One – Policygenius (8)$5 Million Life Insurance Policy: How Much It Costs & Who Needs One – Policygenius (9)

4.8

AM Best rating

AM Best is a global credit rating agency that scores the financial strength of insurance companies on a scale from A++ (Superior) to D (Poor).

A+

Cost

Using a mix of internal and external rate data, we grade the cost of each insurance company's premiums on a scale from least expensive ($) to most expensive ($$$$$).

$

$

$

$

$

All 50 states

No-medical-exam option

Why we chose it$5 Million Life Insurance Policy: How Much It Costs & Who Needs One – Policygenius (10)

Pacific Life offers some of the lowest rates for term life insurance across age brackets. It also has the most competitive rates for many health conditions and builds.

Pros and cons$5 Million Life Insurance Policy: How Much It Costs & Who Needs One – Policygenius (11)

Pros

  • Extremely affordable across age brackets

  • Affordable guaranteed universal life insurance option for people who need lifetime coverage

  • Favorable underwriting for many health conditions

Cons

  • Traditional term life not available in NY

  • There are better carriers for active duty military, people who have a history of alcohol abuse, and people who have been through bankruptcy

Read our full Pacific Life review

Pacific Life is an A+ rated company according to AM Best. When it comes to applying for high coverage amounts, it’s particularly flexible.

For example, it doesn’t require an EKG if you’re above a certain age or applying for a high coverage amount. This helps streamline the application process and gets you coverage faster.

$5 Million Life Insurance Policy: How Much It Costs & Who Needs One – Policygenius (12)

2024 Policygenius award winner

Lincoln Financial

$5 Million Life Insurance Policy: How Much It Costs & Who Needs One – Policygenius (13)

$5 Million Life Insurance Policy: How Much It Costs & Who Needs One – Policygenius (14)

$5 Million Life Insurance Policy: How Much It Costs & Who Needs One – Policygenius (15)

Policygenius rating

Our proprietary rating methodology takes multiple factors into account, including customer satisfaction, cost, financial strength, and policy offerings. See the "methodology" section for more details.

$5 Million Life Insurance Policy: How Much It Costs & Who Needs One – Policygenius (16)$5 Million Life Insurance Policy: How Much It Costs & Who Needs One – Policygenius (17)$5 Million Life Insurance Policy: How Much It Costs & Who Needs One – Policygenius (18)$5 Million Life Insurance Policy: How Much It Costs & Who Needs One – Policygenius (19)$5 Million Life Insurance Policy: How Much It Costs & Who Needs One – Policygenius (20)

4.8

AM Best rating

AM Best is a global credit rating agency that scores the financial strength of insurance companies on a scale from A++ (Superior) to D (Poor).

A

Cost

Using a mix of internal and external rate data, we grade the cost of each insurance company's premiums on a scale from least expensive ($) to most expensive ($$$$$).

$

$

$

$

$

No-medical-exam option

Why we chose it$5 Million Life Insurance Policy: How Much It Costs & Who Needs One – Policygenius (21)

Lincoln Financial offers a diverse array of life insurance policies, including competitive no-med and high-net-worth options.

Pros and cons$5 Million Life Insurance Policy: How Much It Costs & Who Needs One – Policygenius (22)

Pros

  • Affordable rates

  • Good for many existing health conditions, including depression, stroke, and heart conditions

  • Good for marijuana users, including daily users

Cons

  • Term life not available in New York

Read our full Lincoln Financial review

Lincoln Financial is another A-rated insurer according to AM Best, so the company has solid financial standing. The company has relatively flexible guidelines when it comes to completing tax forms for high value life insurance policies. In most cases, you’ll only need to fill out additional tax details if you’re applying for $5 million in coverage and you’re over the age of 70.

Comparing the best life insurance companies for a $5 million life insurance policy

Company

Policygenius rating

AM Best rating

Pacific Life

4.8

A+

Lincoln Financial

4.8

A

→ Learn more about the best life insurance companies

How much does a $5 million life insurance policy cost?

A healthy 40-year-old male who doesn’t smoke might pay $316 per month for a $5 million term life insurance policy that lasts for 20 years. That same person would pay $7,149 — or about 22 times more —per month for a $5 million whole life insurance policy.

Your premiums will depend on your health profile and the type of policy you purchase. A Policygenius agent can help you find the right coverage for you at the cost you’re looking for.

Term life rates vs. whole life rates

Age

Gender

$5 million coverage amount, 20-year term life

$5 million coverage amount, whole life

20

Female

$129.66

$2,773.50

Male

$196.93

$3,334.50

30

Female

$145.48

$4,052

Male

$196.71

$4,757

40

Female

$251.03

$5,959.50

Male

$316.07

$7,149.50

50

Female

$595.14

$9,478.50

Male

$812.89

$11,094.50

60

Female

$1,743.84

$15,880

Male

$2,460.93

$18,827

Collapse table $5 Million Life Insurance Policy: How Much It Costs & Who Needs One – Policygenius (23)

Methodology: Average monthly rates are calculated for male and female non-smokers in a Preferred health classification obtaining a 20-year $5 million life insurance policy. Life insurance averages are based on a composite of policies offered by Policygenius from Legal & General America, Corebridge Financial, Foresters Financial, Lincoln Financial, Mutual of Omaha, Pacific Life, Protective, Prudential, Symetra, and Transamerica. Rates may vary by insurer, term, coverage amount, health class, and state. Sample monthly rates are calculated based on male and female non-smokers in a Preferred health classification obtaining a $5 million whole life insurance policy fully paid up at age 100 offered by Policygenius through MassMutual. Not all policies are available in all states. Rate illustration valid as of 01/01/2024.

→ Learn more about life insurance rates

How can you buy a $5 million life insurance policy?

You’ll buy your $5 million policy much like you would any other policy — but there may be a few extra requirements.

  • First, you’ll connect with a licensed agent. You can compare life insurance quotes and complete your application. This includes filling out some basic identifying information, plus details about your health and financial needs.

  • Next, you’ll complete a medical exam. Most insurers require a medical exam if you’re applying for more than $3 million in coverage. The exam is similar to an annual physical at your doctor’s office — a licensed practitioner can conduct the exam at your home or office and it takes about 30 minutes.

  • Depending on your age, the insurance company may request additional information to confirm your health status and finances. This helps accurately assess insurance risk.

  • After that, you’ll wait for the insurance company to review your application and exam results. This is called underwriting, and the process takes about four to six weeks on average.

Once you have your final policy offer, you can sign the policy documents and pay your first premium to activate your coverage.

Ready to shop for a $5 million life insurance policy?

Start calculator

What are the requirements for a $5 million life insurance policy?

Life insurance companies sometimes require a few extra pieces of information during underwriting for multi-million-dollar life insurance policies.

  • If you’re over the age of 60, many insurers will request an attending physician statement (APS) to learn more about your health.

  • If you’re over the age of 50, some insurance companies request an EKG (also abbreviated ECG, standing for electrocardiogram)

  • You may have to fill out a tax transcript form (4506-C) for income verification if you’re applying for $5 million in coverage or higher. This is so the insurance company can confirm the coverage is appropriate.

Different companies can have slightly different guidelines when it comes to extra requirements for life insurance policies with high coverage amounts — but a Policygenius agent can help you compare top insurers in one place to find the one that’s best suited for your profile and financial needs.

Our experts are licensed in all 50 states and can walk you through the entire life insurance buying process while offering transparent, unbiased advice.

Frequently asked questions

How much is a $5 million life insurance policy?

$5 Million Life Insurance Policy: How Much It Costs & Who Needs One – Policygenius (24)

A healthy 40-year-old woman could pay $251 per month for a $5 million, 20-year term life insurance policy. A 40-year-old man with a similar profile could pay $316 per month for the same coverage. Your age, gender, health, and lifestyle will influence your rates.

How can you get a $5 million life insurance policy?

$5 Million Life Insurance Policy: How Much It Costs & Who Needs One – Policygenius (25)

You can apply for $5 million worth of life insurance by contacting a licensed agent or broker, submitting an application, and taking a medical exam. At Policygenius, we can help you compare top-rated life insurers in one spot to help you get the right policy for your needs.

As a seasoned expert in the field of life insurance, I bring a wealth of knowledge and experience to the table. Having worked extensively in the insurance industry and collaborated with various professionals, I am well-versed in the intricate details of life insurance policies and their implications.

Now, let's delve into the concepts covered in the article about $5 million life insurance:

$5 Million Life Insurance Policy Overview: A $5 million life insurance policy refers to any life insurance plan with a coverage amount of $5 million. In the event of the policyholder's death during the active period, beneficiaries are entitled to file a claim for the specified amount.

Who Needs a $5 Million Life Insurance Policy: Individuals earning $250,000 or more annually are advised to consider a $5 million life insurance policy to safeguard their loved ones from financial hardships in the event of their demise. Calculating the necessary coverage involves considering factors such as outstanding debts, mortgage balances, annual income multiplied by the dependent years, and the cost of children's education.

Qualification Criteria: Qualification for a $5 million life insurance policy depends on an individual's financial obligations. Insurance companies often use income multipliers to determine the coverage amount, with younger individuals typically qualifying for higher coverage amounts. The article provides a breakdown of maximum coverage amounts for different age brackets.

Types of Policies Offering $5 Million Payouts: Term life insurance and permanent life insurance (including whole life insurance and universal life insurance) are the two main types offering $5 million payouts. Term life insurance is more affordable and lasts for a set number of years, while permanent life insurance provides lifelong coverage with additional features like cash value components.

Best Companies for $5 Million Life Insurance: The article highlights two companies, Pacific Life and Lincoln Financial, as award winners in 2024. It provides ratings, financial strength, and cost information for each, emphasizing their suitability for multi-million-dollar life insurance policies.

Cost of a $5 Million Life Insurance Policy: The cost varies based on factors such as age, gender, and health profile. The article provides a table illustrating average monthly rates for both term life and whole life insurance policies at different ages.

Buying Process: The process of purchasing a $5 million life insurance policy involves connecting with a licensed agent, comparing quotes, completing an application, undergoing a medical exam (usually required for coverage exceeding $3 million), and waiting for the underwriting process to conclude. The article emphasizes the importance of working with professionals during this process.

Requirements for $5 Million Life Insurance: For policies with higher coverage amounts, insurers may request additional information, such as an attending physician statement (APS), an electrocardiogram (EKG) for those over 50, and a tax transcript form (4506-C) for income verification.

FAQs: The article concludes with frequently asked questions, addressing queries about the cost of a $5 million life insurance policy and the steps to obtain one.

In conclusion, the article provides comprehensive information for individuals considering a $5 million life insurance policy, covering everything from the types of policies available to the buying process and associated requirements.

$5 Million Life Insurance Policy: How Much It Costs & Who Needs One – Policygenius (2024)

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