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A multi-million dollar life insurance policy isn’t right for everyone. But a $5,000,000 term life insurance policy can be an affordable tool for your family’s financial protection.

When deciding if a $5,000,000 policy is right for you, here are the three most common questions:

  1. Can anyone get a $5,000,000 life insurance policy?
  2. When does $5,000,000 of coverage make sense?
  3. How much does a $5,000,000 life insurance policy cost?

To answer these questions, let’s take a closer look with common scenarios and example pricing for different age groups, genders, and term lengths.

Can anyone get a $5,000,000 life insurance policy?

With large life insurance policies, insurance companies are going to be stricter during underwriting. They will take a magnifying glass to your financials and medical records.

They do this for their protection and yours.

It’s not financially prudent for them to approve a $5,000,000 life insurance policy on someone who is extremely unhealthy and has a high mortality risk.

It’s not ethical for them to approve a $5,000,000 life insurance policy on someone who has a net worth of $45,000. Life insurance companies do not want someone worth more dead than alive.

In order to qualify, insurance companies require financial justification for large policies because life insurance is designed to replace wealth, not increase it.

There are also a number of factors that go into determining if you’re eligible for $5,000,000 worth of coverage. These include your age, income, health, and lifestyle. This large amount of life insurance will have more limitations than smaller policies.

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When does $5,000,000 of coverage make sense?

Not everyone can justify owning $5,000,000 of life insurance. However, purchasing a multi-million dollar life insurance policy isn’t too far-fetched in many situations.

  1. If you’re relatively young, but earn a high wage.

Young high-wage earners can benefit from a multi-million dollar life insurance policy. It protects their loved ones when the earner doesn’t quite yet have much in savings or a healthy investment portfolio.

  1. If your assets could be subject to estate and inheritance taxes.

If you die with assets in your name worth $11.70 million (as of 2021) or more, your loved ones will be responsible for a large tax bill owed to the federal government. Individual states also have their own separate estate tax bill. Some state’s exemption limits are as “low” as $1,000,000.

Keep in mind that your estate is the value of all your property and assets combined. Your house, your cars, your savings and retirement accounts, etc. You may be surprised at how quickly things add up.

Estate taxes are due typically nine months after your death. The death benefit of your life insurance policy provides your family liquid funds that can be quickly accessed to pay these bills.

If your net worth is high, you may not want to own your own life insurance policy. Your $5,000,000 policy may be just enough to put you over those estate tax exemption limits. If you own your own life insurance, it will be included in your estate. Work with a financial planner for ways to reduce your tax bill.

  1. If you own a business.

If you own a business, succession planning is vital. When you die, what happens to the company?

Life insurance policies are common financial vehicles for buy-sell agreements. This is a legal agreement with another party who plans on taking over ownership when you die.

Upon your death, the other party uses the life insurance death benefit to buy your interest in the business from your estate. If your interest in the company is worth millions, then a $5,000,000 life insurance policy makes sense.

  1. If you’re a high-net-worth individual.

If you’ve been successful for a long time, you and your family have likely grown accustomed to a certain lifestyle. A $5,000,000 life insurance policy may be needed for income replacement so your family can maintain their standard of living.

How much does a $5,000,000 life insurance policy cost?

The cost of a life insurance policy is determined by a number of factors such as gender, age, health status, and the policy coverage and term length you choose.

I’ll illustrate the cost of a $5,000,000 term life insurance policy across various ages and risk classes. Term length options vary from 10, 15, 20, 25, 30, 35, and 40 years, but I’ll show the most common to keep things simple.

Cost of a $5,000,000 Term Life Insurance Policy
Insured: Male, Age 30
Risk Class10-Year Term Monthly Premium20-Year Term Monthly Premium30-Year Term Monthly Premium
Preferred Plus$121.97$150.21$242.20
Preferred$135.23$190.78$319.51
Standard Plus$169.57$257.50$429.63
Standard$226.10$295.75$545.44
Preferred Tobacco$400.35$621.30$1,054.85
Standard Tobacco$600.10$846.55$1,394.85
Cost of a $5,000,000 Term Life Insurance Policy
Insured: Female, Age 30
Risk Class10-Year Term Monthly Premium20-Year Term Monthly Premium30-Year Term Monthly Premium
Preferred Plus$72.37$104.08$198.05
Preferred$92.18$141.10$249.00
Standard Plus$141.38$210.75$374.38
Standard$162.35$244.20$411.69
Preferred Tobacco$328.10$485.30$770.10
Standard Tobacco$600.10$629.80$1,025.10
Cost of a $5,000,000 Term Life Insurance Policy
Insured: Male, Age 40
Risk Class10-Year Term Monthly Premium20-Year Term Monthly Premium30-Year Term Monthly Premium
Preferred Plus$182.11$243.09$450.58
Preferred$231.20$313.22$539.80
Standard Plus$270.71$429.20$757.81
Standard$333.41$488.96$881.15
Preferred Tobacco$685.10$1,173.80$2,074.80
Standard Tobacco$994.39$1,630.68$2,648.55
Cost of a $5,000,000 Term Life Insurance Policy
Insured: Female, Age 40
Risk Class10-Year Term Monthly Premium20-Year Term Monthly Premium30-Year Term Monthly Premium
Preferred Plus$142.16$196.45$350.03
Preferred$167.66$242.69$417.26
Standard Plus$210.48$331.07$588.15
Standard$240.59$380.07$676.89
Preferred Tobacco$553.30$929.43$1,445.80
Standard Tobacco$727.55$1,122.80$1,913.30
Cost of a $5,000,000 Term Life Insurance Policy
Insured: Male, Age 50
Risk Class10-Year Term Monthly Premium20-Year Term Monthly Premium30-Year Term Monthly Premium
Preferred Plus$372.72$650.76$1,207.08
Preferred$464.07$776.73$1,410.95
Standard Plus$600.38$1,108.52$1,970.47
Standard$750.93$1,251.66$2,284.54
Preferred Tobacco$1,702.94$2,950.30$5,168.80
Standard Tobacco$2,450.93$3,838.55$5,802.05
Cost of a $5,000,000 Term Life Insurance Policy
Insured: Female, Age 50
Risk Class10-Year Term Monthly Premium20-Year Term Monthly Premium30-Year Term Monthly Premium
Preferred Plus$321.72$520.27$903.93
Preferred$361.45$586.94$1,028.56
Standard Plus$481.05$766.65$1,255.40
Standard$240.59$900.70$1,659.83
Preferred Tobacco$1,239.68$2,006.80$3,451.85
Standard Tobacco$1,531.91$2,831.30$4,582.30

Premiums for multi-million dollar life insurance rates can range quite a bit from company to company, which is why comparison shopping and getting quotes from multiple life insurance companies is crucial. You can do this easily through Quotacy’s quoting tool without even leaving our website.

When you’re ready to apply, your Quotacy agent will keep you updated from start to finish as your application turns into a policy.

If something happens to you, term life insurance will financially protect the loved ones you leave behind. You can take pride in knowing you’re shielding them from financial harm should you die unexpectedly.

A $5,000,000 life insurance policy can provide a large safety net, but $5,000,000 may not be the right amount for you.

Our life insurance needs calculator can help you determine the right amount of coverage you need. Check it out here: life insurance needs calculator.

If you prefer to talk with an advisor to determine how much life insurance you need, contact us directly here at Quotacy. Our agents are happy to go over your needs, but won’t push you into buying coverage you don’t need.

Note: Life insurance quotes used in this article accurate as of April 19, 2021. These are only estimates and your life insurance costs may be higher or lower.

 

About the writer

Headshot of Natasha Cornelius, a life insurance writer, for Quotacy, Inc.

Natasha Cornelius

Marketing Content Manager

Natasha is a writer and content editor at Quotacy. She is also co-host of Quotacy’s YouTube series. She can't get enough of life insurance and outside of work is also working toward her Chartered Life Underwriter designation. Connect with her on LinkedIn.