Most term life policies cap coverage at or below the $10 million dollar mark, because high-level policies come with high-level eligibility requirements. But if you have a family business or taxable estate, you may need a large policy to help your family cover the expenses you leave behind and protect your business.
How much does $10 million life insurance cost?
This kind of policy doesn’t come cheap. But if you have the means to qualify for $10 million in coverage, you can likely afford the premiums. Still, the earlier you get your start, the more money you’ll save. A man who is 30 years old, healthy and a non-smoker, can get a 20-year term policy for around $295 per month, based on rates from Policygenius. The same policy for a woman with similar stats may cost $217 per month.
Can I get a $10 million life insurance policy?
This level of coverage creates a higher risk for the insurance company, which means your eligibility will be highly scrutinized. You’ll likely need to make at or near $1 million per year to qualify. And be prepared to present documentation to prove your worth and the assets you need to protect, including your broker-dealer statements, tax returns, CPA statements and charitable giving statements.
Life insurance isn’t meant to enrich your family or create a lavish lifestyle. Rather, it’s meant to replace income and maintain your family. For this reason, you’ll need to prove you earn enough income to qualify for a $10 million life insurance policy.
If you can’t get $10 million in life insurance coverage from one policy, consider stacking policies to achieve the level of coverage you want. For example, if you are able to purchase several smaller policies to equal $10 million in coverage you will effectively accomplish the same goal as finding a carrier to write a $10 million policy for you.
Medical exams are required for $10 million policies
A $10 million policy requires a medical questionnaire and a full paramedical exam. Some insurers offer temporary coverage while you wait for the results of your exam, though the benefit of your temporary policy won’t be for the full $10 million.
A health condition like a cancer diagnosis or past heart attack won’t necessarily disqualify you from coverage, but it may raise your premiums. If you can prove that your condition is being managed by medication and a doctor’s care, you may still qualify.
Policies that don’t require medical underwriting, such as simplified issue and guaranteed issue life insurance, tend to have a cap between $25,000 and $50,000.
Is a $10 million life insurance policy right for me?
It might be, but consider the following aspects of your finances to determine whether you need this much coverage:
- Business expenses. If you have a high-value inventory in your business, this policy could potentially keep your family from being saddled with that debt. But a policy like this can also be used as a way to sell your business interests to a partner.
- Personal debt. The mortgage on your home and vehicle loans combined with any other debt you might carry can add up to a big burden when you’re no longer around.
- Tuition. Whether you have kids in private school now or want to plan for future college funds, you should include that money in your insurance coverage needs.
- Estate Taxes. If your estate is worth more than the estate tax threshold — which is $11.58 million in 2020 — your family will need money to help pay for that.
- Long-term care. Whether you have a family with long-term medical needs now or plan to care for elderly family in the future, your life insurance can make sure they’re cared for after you’re gone.
- End-of-life expenses. Your funeral and any other medical expenses related to the end of your life should be a part of your coverage.
- Charitable giving. If you support charities while you’re alive, you can make a large lump-sum donation as part of your life insurance payout.
Whole life or term life?
Consider whether a term or whole life policy is the right choice for you. At this coverage level, a whole life policy can cost you hundreds of thousands each year. Many term policies are convertible, but before you decide to make a multimillion-dollar policy permanent, consider whether you’ll need this much insurance when you’re older and your kids are grown. If you outlive your term policy, it may be an opportunity to adjust your death benefit to a lower amount.
What to watch out for
A policy this large comes with a higher than normal premium. Taking the time to consider your finances and coverage needs before you buy a policy can ensure you don’t end up paying too much. Reassessing at regular intervals, or when major life events come up, can make sure you don’t end up with more coverage than you need. As you age and your children grow up, a $10 million life insurance policy may no longer be necessary.
You probably won’t be eligible for a policy of this size without a considerable estate and the documentation to back it up. But with this much at stake, compare all your life insurance options before choosing an insurance company.
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