If you have a high income or a high net worth — which is usually defined as $1 million or more in liquid assets — you can use life insurance to support your family or protect an inheritance when you die. We researched the best life insurance companies and policy options for high-net-worth individuals to help you maximize your wealth.
Why should you buy life insurance if you have a high net worth?
If you have enough money to cover your financial obligations when you die, you might be able to self-insure, which means you can cover those costs without needing a life insurance policy. But it typically makes sense to insure your income for the cost of a premium, just like you would insure a house, a car, or any other valuable asset.
You may have enough savings to pay off a mortgage, fund your child’s college expenses, and leave your spouse with a nest egg. But if you have assets totaling more than $12.92 million, [1] estate taxes could significantly decrease the inheritance your family gets when you die.
Since the life insurance death benefit is almost always tax-free, a life insurance policy could potentially cover the estate tax and preserve an inheritance. Plus, the life insurance payout doesn’t have to go through probate court.
“The greatest advantage most policies offer high-net-worth families is speed. Life insurance proceeds are often paid out within the month of someone’s passing,” says Ian Bloom, certified financial planner, registered life planner, and owner of Open World Financial Life Planning. “This can make a substantial amount of funds available for the family in a financially vulnerable time, while the estate details are still being worked out.”
If you’re a high-net-worth business owner, life insurance can protect the function of your business, too. If you share business ownership, it can be beneficial for the partners to take out life insurance to buffer against financial loss if one partner dies, so the other is able to buy out their share.
Best life insurance companies for high-net-worth individuals
Methodology
Why you can trust our picks
Our recommendations are based on internal and external expert analysis, as well as our Policygenius Life Insurance Price Index, which uses real-time data from leading life insurance companies to determine pricing trends. When reviewing a life insurance company, our editorial team uses a proprietary scoring rubric with five factors — price, policy details, financial strength, transparency, and customer experience — to assign an unbiased rating between one and five stars. These ratings are also taken into consideration as part of our company recommendations. We don’t get paid for our reviews.
Our reviews and recommendations can help you find a reliable insurer for your family’s financial protection, but the best life insurance company for you depends on multiple factors. A licensed agent at Policygenius can support you during the application process to ensure you get the right coverage for your circumstances at the most competitive price.
2023 Policygenius award winner
Lincoln Financial
4.8
No-medical-exam option
Why we chose it
Lincoln Financial offers a diverse array of life insurance policies, including competitive no-med and high-net-worth options.
Pros and cons
Pros
Affordable rates
Good for many existing health conditions, including depression, stroke, and heart conditions
Good for marijuana users, including daily users
Cons
Term life not available in New York
Best term life insurance for high-net-worth applicants: Lincoln Financial
Lincoln Financial offers some of the highest coverage amounts for term life insurance compared to other companies. You can buy up to $60 million in coverage from Lincoln Financial if your income and assets justify it.
2023 Policygenius award winner
MassMutual
4.9
All 50 states
Why we chose it
MassMutual’s whole life insurance plan provides a lifetime coverage option that builds cash value with the potential to earn dividends.
Pros and cons
Pros
Strong financial stability ratings
Higher potential for dividends for whole life policyholders than many competitors
Good customer satisfaction ratings
Cons
High term life premiums
Term life not available through Policygenius
Best whole life insurance for high net worth individuals: MassMutual
In addition to having high coverage amounts available — $10 million or more — MassMutual pays dividends to its whole life insurance policyholders, which means your cash value can grow faster. Plus, the company has high financial ratings from trusted third-party agencies like AM Best, so you can count on the company to be financially stable for years to come.
→ Learn more about the best life insurance companies of 2023
Best life insurance options for high-net-worth applicants
The best type of life insurance for you will depend on your financial goals. If you’d like to provide your family with extra funds if you pass away unexpectedly, or replace active income if you’re still earning a salary, term life insurance may be right for you.
If you’re interested in a permanent, guaranteed death benefit and another way to grow your tax-deferred savings, then a cash value life insurance policy might be a better fit. Sometimes, a combination of both types of policies can provide the right amount of financial protection for people with high coverage needs.
Term life insurance
Many financial advisors recommend buying a life policy equal to 10 to 15 times your income, but the amount that’s right for you will depend on your personal financial situation — including your assets, debts, household income, and dependents. Sometimes larger insurers are more likely to offer policies with very high coverage amounts, which is a helpful factor to keep in mind while shopping.
If you’re getting life insurance coverage to offset your estate taxes, then the right company for you will depend on the size of your wealth. Your loved ones will need to pay taxes of up to 40%, so you should get the most affordable policy with a death benefit equal to or greater than your anticipated tax burden.
Whole life insurance
Term life insurance is best for most people, but high-earners who have already maximized contributions to other tax-deferred savings accounts — like 401(k) or Roth IRA — could consider whole life insurance or other permanent policies with a cash value that gains interest.
Certain cash value accounts can protect your money from stock market fluctuations. A traditional investment account usually offers higher returns, but some cash value returns are more predictable. For instance, many whole life policies have a cash value feature that grows at a fixed interest rate set by the insurer.
Whole life insurance has some downsides to keep in mind, too.
It’s much more expensive than a term life policy with the same payout — plus, it can come with increased investment risks depending on the type of policy you purchase.
You’ll have to make costly premium payments for years — or even decades — in order to reap the full benefits of the policy.
Make sure to discuss your options with a financial advisor in order to find the best life insurance policy for your needs.
→ Learn more about having liquidity in your life insurance
Irrevocable life insurance trusts (ILITs)
Trusts may already be part of your estate plan if you have a high net worth, but can be particularly useful when combined with a life insurance policy.
An irrevocable life insurance trust (ILIT) is a trust that cannot be altered or revoked once it’s issued.
The purpose of the ILIT is to hold a life insurance policy. It acts as the policyholder.
When you die, the trust receives the death benefit and pays it out to the trust beneficiaries according to your instructions.
An ILIT can be an especially effective way to pass wealth onto your children. Not only does it make sure your beneficiaries receive the death benefit in a promptly manner — even if they are minors — but it also has some estate tax benefits.
For example, since a trust is a separate entity that can hold your assets, an ILIT won’t be considered part of your taxable estate as long as it was created more than three years prior to your death.
You can work with an estate attorney to ensure your trust is set up correctly.
→ Is life insurance a good investment?
How to buy life insurance as a high-net-worth applicant
Comparing quotes and policy features from different life insurance companies is the best way to find a policy that protects your family and fits all of your needs. A Policygenius agent can help you get the right coverage to protect your legacy.
How can you use life insurance to build wealth?
Life insurance can be used to build wealth across generations by providing a payout to your surviving loved ones. The death benefit can be used to pay estate tax, as well as preserve remaining assets. In that sense, as an estate-planning tool, life insurance is more designed to protect wealth rather than to build it.
When it comes to permanent life insurance, you can access the cash value from your policy while you’re alive. You can either withdraw from or take loans out against your cash value if it accumulates enough. If you take a loan, you’re technically taking a loan from the insurance company, so your cash value itself still gains interest.
“If used properly, the [life insurance] proceeds can be accessed tax-free as a loan, and the interest rates are guaranteed,” says Bloom of Open World Financial Life Planning. “This enables the policies to act similarly to a low-return bond portfolio with minimal tax implications.”
Just keep in mind that any outstanding loans will be subtracted from the death benefit if you die before paying it back. This means your beneficiaries would receive less money.
It’s generally a best practice to consult with a financial planner and eventually a wealth manager to come up with a financial strategy that’s going to serve your needs when it comes to building and maintaining wealth.
→ Get free life insurance quotes
Is life insurance considered an asset for high-net-worth individuals?
Term life insurance isn’t considered an asset in most cases because it doesn’t have cash value, but whole life insurance usually is. Whether your life insurance policy is an asset depends on whether you’ll financially benefit from the policy while you’re alive.
Because the cash value of a permanent policy functions like an additional investment account, which you can withdraw from or take a loan against, it’s treated like an asset the same way a traditional retirement account is.
Term life only pays out after you die, so it could only become an asset if it pays out to your estate (instead of an heir) and your estate exceeds the $12.92 million tax limit.
Frequently asked questions
Do you need life insurance if you have a high net worth?
If anyone depends on your income or if your beneficiaries will have to pay an estate tax on their inheritance, you can use life insurance to cover their expenses so they can maintain their quality of life and preserve their assets.
How does net worth affect life insurance?
Your net worth impacts how much life insurance coverage you can buy. The higher your income or net worth, the more coverage you can be approved for, and vice versa. In general, your life insurance coverage should be proportional to your financial obligations.
