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 a content editor and licensed life, health, and disability insurance expert. She has extensive experience bringing brands to life and has built award-nominated campaigns for travel and tech. Her insurance expertise has been featured in Bloomberg News, Forbes Advisor, CNET, Fortune, Slate, Real Simple, Lifehacker, The Financial Gym, and the end-of-life planning service. | Updated on August 18, 2023 Why you should trust Insure.com Quality Verified At Insure.com, we are committed to providing honest and reliable information so that you can make the best financial decisions for you and your family. All of our content is written and reviewed by industry professionals and insurance experts. We maintain strict editorial independence from insurance companies to maintain editorial integrity, so our recommendations are unbiased and are based on a comprehensive list of criteria. 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 Understanding your life insurance policy options How to read your life insurance policy How to find out if someone has life insurance What is a life insurance beneficiary? Life insurance riders: What they are and how they work How to make sure you have enough life insurance Family caregivers guide to insurance: What you need to know 8 ways to find life insurance when you're uninsurable 10 ways to save money on life insurance Combination life insurance or long-term care: Make the right pick Covid-19 and life insurance: What you need to know? 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The 5 most terrifying life insurance words Life insurance on a shoestring budget How to maximize the cash value of a life insurance policy Life insurance coverage: 6 Things You Didn't Know It Covers Sports that could knock you out of contention for life insurance Variable life and variable annuity sub-accounts: The more the merrier? Life insurance living benefits provide cash for the terminally ill Insurance and marriage 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 What is indexed universal life insurance? By Shivani Gite What happens if you outlive your term life insurance? 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