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Compare $5 million life insurance policies
Whether it’s for estate taxes or paying off debt, choose the type of policy that aligns with your financial planning.
What’s the cost of a $5 million life insurance policy?
A healthy 30-year-old man will pay about $131 per month for a 20-year term life policy at this coverage level. Similarly, a 30-year-old woman can buy the same policy for $99 per month.
However, a 30-year-old man who smokes can pay around $620 per month for a$5 million policy, while a woman who smokes might pay $485 per month. These show a huge difference in the premium you could pay, based on personal factors like your age, health and lifestyle habits.
* Based on sample rates from Policygenius, August 2020
$5 million in term vs. whole life insurance
You might choose a $5 million term life policy if you need a lower premium or expect your financial needs to go down over time. However, if you outlive your term life policy, you’ll have to qualify for a new policy if you still need life insurance. In this case, you’ll pay a higher premium since you’ll be older and may have pre-existing health conditions.
On the other hand, a $5 million whole life policy will cost significantly more than a term life policy, but the coverage lasts for your entire lifetime and builds cash value. Consider whether you can pay the higher premiums and whether you’ll need this level of insurance after your children have grown or you pay off your mortgage and other debt. A whole life policy benefits you if you expect your financial responsibilities to last well into retirement or beyond.
Another option is to choose a term policy that can convert to permanent life insurance later. With a convertible term life policy, you won’t have to take another medical exam or health questionnaire when converting to permanent life insurance. However, you’ll have to watch timelines since you must convert by a specific deadline written in your policy.
How to qualify for a $5 million life insurance policy
To qualify for a $5 million policy, you’ll need to meet age and income requirements set by the insurance company. You may need to:
- Earn $250,000–$500,000 per year in income. Insurers typically offer 10 to 20 times your current annual income as the maximum coverage you’re allowed.
- Have stable employment. Some insurers prefer the stability of working for a corporation to working as an independent contractor.
- Apply at a young age, such as your 30s. This increases your chance of qualifying because insurers consider your earning potential and present and future financial obligations. However, you can apply at an older age.
Count on taking a medical exam
A $5 million policy requires a medical questionnaire and a 20- to 30-minute medical exam that you can schedule at your leisure. You may have the option to request temporary life insurance coverage while you wait for your test results. If you qualify, the temporary policy may be capped at $1 million instead of the full $5 million.
If you’re looking to bypass the medical exam, you’ll have to settle for much less coverage. Policies without medical underwriting, such as simplified issue and guaranteed issue life insurance, usually cap at $250,000 in coverage.
Will my current health problem disqualify me?
Not necessarily. If you can prove that your condition is managed by medication and a doctor’s care, you may qualify. But a past heart attack or cancer diagnosis will raise your premiums or disqualify you for the policy.
A $5 million policy helps with significant expenses
How much coverage you need depends on your family’s lifestyle, future financial needs and how much your family depends on your financial contribution. Estate planners recommend buying coverage at five to 10 times your annual salary. Expenses to consider when deciding whether a $5 million policy is right for you:
- Mortgage. Consider the monthly expense of your home, how much you owe and how long it might take your family to pay off your mortgage. If you’re seeing high numbers, consider a policy to match.
- Tuition. Whether your kids are in private schools or planning for college education, factoring in tuition expenses can ensure your children get the education you want for them, even after you’re gone.
- Long-term care. If you’re responsible for elderly or ill family members, life insurance can go a long way to help cover their medical care and future expenses in your absence.
- End-of-life expenses. Funeral costs and hospital stays can eat into the money your family needs to get by. Planning to cover these costs with your life insurance money can ensure your family can stay afloat.
- Business costs. Consider whether your business is one you want to keep in the family, or if you simply need to help cover expenses until the business can be sold.
- Estate taxes. If you have an estate worth over $11.58 million, the 2020 estate tax threshold, your life insurance can help pay the taxes to keep your family from having to sell off assets to foot the bill.
Compare life insurance policies with high coverage
See your options for life insurance with million-dollar payouts. Then, choose Go to site to start your personalized quote.
A $5 million life insurance policy can cover major expenses like estate taxes and leave your loved ones with no financial worries after you’re gone. However, the type of policy you choose — term or permanent life — depends on whether your financial obligations will decrease over time as well as whether you’re using it for estate planning or building cash value. Consider a variety of life insurance options to get the most out of the policy you choose.
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