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.
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.
2024 Policygenius award winner
Pacific Life
4.8
All 50 states
No-medical-exam option
Why we chose it
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
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
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.
2024 Policygenius award winner
Lincoln Financial
4.8
No-medical-exam option
Why we chose it
Lincoln Financial offers a diverse array of life insurance policies, including competitive no-med and high-net-worth options.
Pros and cons
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
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 | |
4.8 | A+ | ||
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 |
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.
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.
