Home Life insurance Life insurance basics How life insurance works for high-net-worth individuals How life insurance works for high-net-worth individuals Written by Desiree Ghazi | Reviewed by Nupur Gambhir Nupur Gambhir Nupur Gambhir is an insurance expert and managing editor of Insure.com. She specializes in life and health insurance content, and has experience as a marketing consultant. | Updated on: August 18, 2023 Why you can trust Insure.com Quality Verified At Insure.com, we are committed to providing the timely, accurate and expert information consumers need to make smart insurance decisions. All our content is written and reviewed by industry professionals and insurance experts. Our team carefully vets our rate data to ensure we only provide reliable and up-to-date insurance pricing. We follow the highest editorial standards. Our content is based solely on objective research and data gathering. We maintain strict editorial independence to ensure unbiased coverage of the insurance industry. If you’re wealthy, life insurance is a natural need.How much and what type of life insurance you need can vary depending on your income, assets and debt — current and future. When determining how much life insurance you should buy, everyone, regardless of wealth, starts at the same place: examining their insurance needs. “You need to sit down with your financial advisors and ask a lot of open-ended questions,” says Marv Feldman, president and CEO of Life Happens.Feldman recommends evaluating: What do you owe now and what will you owe in the future?How much money do your beneficiaries need for robust financial protection?How much income do you want your family to have down the road?What are your likely future earnings?Do you have children whose college tuition you will be covreing? Your answers will determine the exact amount of life insurance coverage you will want to buy. Once you know how much life insurance you need, you can get quotes from three to five life insurance companies to see who will offer you the most affordable rate. Why do high-net-worth individuals need life insurance?High-net-worth individuals may be able to self-insure some of their family’s financial obligations. They also may need life insurance to be sure their families can meet these obligations without having to sell assets, Feldman says.Proceeds from life insurance can also be used to pay funeral expenses and estate taxes. Your survivors will owe federal taxes if your estate is worth more than about $12.92 million — or 25.84 million for a married couple. Depending on where you live, your survivors may owe taxes to the state, too. You likely want to have enough life insurance to cover that tax burden so that your heirs don’t have to sell assets to pay the state treasury, explains Feldman.What type of life insurance should high-net-worth individuals get?When mapping out what type of insurance to get, Feldman recommends using 20 years as a guide. If you want your life insurance to be there for your family until a certain time within the next 20 years, you can get by with term life insurance. Term life has lower premiums than permanent insurance, he says.Term insurance is what it says: it is for a fixed length of time. However, if you expect your survivors may need the proceeds more than 20 years from now, you should consider permanent life insurance, such as whole life. Permanent insurance offers lifelong financial protection.Another advantage to permanent life insurance is that you can accumulate cash value on a tax-deferred basis and that cash can be used for a variety of purposes, including supplementing your retirement income. This is a good option for high-net-worth individuals who have maxed out other investments. How Life insurance protects a high-net-worth individual‘s businessIf you own a family business, life insurance can help with succession planning. If banks don’t offer a favorable rate to the business’ heirs, life insurance can provide a financial cushion. In this scenario, Feldman suggests obtaining permanent life insurance rather than term insurance.High-income earners who are in professions where they could be sued — such as medicine or law — should also get life insurance. In most states, the owner of the policy, which may or may not be the insured, is protected from the claims of creditors. Note: To be protected from creditors, the death benefit has to be paid to a trust with a third-party trustee. “Then this money becomes protected from in-laws, outlaws and creditors,” Feldman says. QuickTake What happens to the cash value of my whole life insurance policy when I die? How to buy life insurance What is cash value life insurance and how does it work? How to read your life insurance policy How to find a lost life insurance policy Comprehensive guide to life insurance: What it is and how it works How to get life insurance if you're uninsurable Who's who on a life insurance policy The life insurance contestability period: What you need to know Is accidental death and dismemberment insurance right for you? How to make sure you have enough life insurance Life insurance riders: What they are and how they work Guide to life insurance for transgender applicants Understanding your life insurance policy options What is a life insurance beneficiary? 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How to convert a term life policy to permanent life insurance Life insurance tax surprise: The unholy trinity How life insurance rates are determined How to do a needs analysis before you buy life insurance Sports that could knock you out of contention for life insurance Variable life and variable annuity sub-accounts: The more the merrier? See more > How much does life insurance for high-net-worth individuals cost?How much you pay for life insurance depends on multiple factors. One of them is the amount of coverage you buy. The more coverage you need, the more life insurance will cost. Below are average annual premiums for a nonsmoker with Preferred Plus health classification, which means the applicant is in excellent health. We also included rates for people in a Regular health classification, which is the second to lowest health classification and is for people in average health. Term length, amountMale, age 40, Preferred PlusFemale, age 40, Preferred PlusMale, age 50, RegularFemale, age 50, Regular10-year, $1 million level term guaranteed rate $416 $359$2,373$1,81720-year, $1 million level term guaranteed rate$709$589$3,728$2,79425-year, $1 million level term guaranteed rate$1,411$1,128$4,720$3,50710-year, $2 million level term guaranteed rate$761$650$4,500$3,44820-year, $2 million level term guaranteed rate$1,348$1,107$7,150$5,35125-year, $2 million level term guaranteed rate$2,762$2,197$9,383$6,95810-year, $5 million level term guaranteed rate$1,842$1,557$11,081$8,50120-year, $5 million level term guaranteed rate$3,328$2,724$17,549$13,14225-year, $5 million level term guaranteed rate$6,646$5,257$22,819$16,88110-year, $10 million level term guaranteed rate$3,609$3,038$22,064$16,93120-year, $10 million level term guaranteed rate$6,597$5,385$34,790$26,07125-year, $10 million level term guaranteed rate$13,343$10,514$45,502$33,663Data source: Compulife Quotation System as of July 2023.Life insurers base premiums vary widely from person to person. How much you actually pay will depend on your age, health, lifestyle choices, and your unique needs. Individuals with a high-net-worth should work with a financial planner or estate attorney to determine their exact coverage needs and to make sure they are buying the right amount of financial protection. × Get Free Life Insurance Quotes Today! Zip Code Please enter valid zip Age Age 16 – 20 21 – 24 25 – 34 35 – 44 45 – 54 55 – 64 65+ Coverage Amount Coverage Amount $50,000 – $100,000 $100,000 – $200,000 $200,000 – $300,000 $400,000 – $500,000 $500,000 – $1,000,000 $1,000,000 – $2,000,000 $2,000,000 – $5,000,000 $5,000,000+ Coverage Type Coverage Type Whole Life Term Life Final Expense Not Sure Gender Gender Male Female Non-Binary Tobacco Use Yes No Compare Quotes Related Articles Mother’s Day Index 2025: Mom’s annual salary climbs 4%, now more than $145,000 By Sarah Sharkey How to buy life insurance By Erik Martin Mother’s Day Index 2024: Mom’s salary increases by 5% from 2023 By Chris Kissell What is term life insurance and how does it work? By Desiree Ghazi What is final expense insurance and how does it work? By Desiree Ghazi Mortgage protection insurance: Who needs it and why By Huma Naeem On this page Why do high-net-worth individuals need life insurance?What type of life insurance should high-net-worth individuals get?How Life insurance protects a high-net-worth individual's businessHow much does life insurance for high-net-worth individuals cost? ZIP Code Please enter valid ZIP See rates