If you have a high income or a high net worth, 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.
Key takeaways
Life insurance for individuals with a high net worth can be used to protect a family’s inheritance or a business. It can also complement an investment strategy.
Financial experts typically consider $1 million or more in liquid assets as a high net worth.
If you have a high net worth, a financial planner and an insurance professional can help you find the right combination of policies for you.
Why should you buy life insurance if you have a high net worth?
If you earn a high salary, it usually makes sense to insure your income, just like you would insure a house, car, or any other asset. But even if you have enough money for your family to maintain their lifestyle when you die, life insurance can be used for the following purposes.
Business protection. If you share business ownership with a partner, you can take out life insurance to buffer against financial loss. If one partner dies, the other is able to buy out their share with the proceeds from the life insurance death benefit. This is called a buy-sell agreement.
Safe investments. Certain permanent life insurance policies that come with cash value accounts can protect your money from stock market fluctuations. A traditional investment account usually offers higher returns, but some cash value returns, while usually lower, are more predictable.
Estate taxes. If you have assets totaling more than $13.61 million, [1] your family may need to pay estate taxes of up to 40%, which could decrease their inheritance. A life insurance with a death benefit equal to or greater than the anticipated tax burden can help to offset these taxes and preserve your loved ones’ wealth.
“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.”
What are the best life insurance options if you have ahigh net worth?
The best type of life insurance for you will depend on your financial goals. Sometimes, a combination of different types of policies can provide the right amount of financial protection for people with high coverage needs.
Term life insurance
If you’d like to provide your family with extra funds if you pass away unexpectedly or help them replace your lost income if you’re still earning a salary, term life insurance may be right for you.
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.
Permanent life insurance
If you’re interested in a permanent, guaranteed death benefit and another way to grow your tax-deferred savings, then a permanent policy with a might be a better fit.
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.
Many whole life policies have a cash value feature that grows at a fixed low interest rate set by the insurer, making it a safe and predictable investment.
Other types of permanent policies, like indexed universal life insurance (IUL) or variable universal life insurance (VUL), give you more control over how your cash value is invested. These policies give you the opportunity for more tax-deferred gains than you’d earn with a whole life policy. Variable life policies in particular must be registered with the SEC due to their complex investor choices. [2]
Regardless of the type of permanent life insurance policy you purchase, you don’t have to worry about your coverage expiring.
Permanent life insurance has some downsides to consider, too.
It’s much more expensive than a term life policy with the same payout.
Some types of policies — especially VUL — can come with significant investment risk if your cash value investments underperform.
You’ll have to make costly premium payments for years — and often 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 the differences between term and whole life insurance
Comparing different types of life insurance for high-net-worth individuals
Term life | Whole life | Indexed universal life | Variable universal life | |
Main features | – Expires after a set number of years, usually 10 to 30 – Pure insurance with no investment component | – Permanent coverage – Cash value grows at a fixed low rate set by the insurer | – Permanent coverage – Cash value growth is tied to a market index | – Permanent coverage – Cash value invested in sub-accounts of your choosing, can be invested directly in securities |
Main benefits | – Affordable – Easy to manage – Coverage only when you need it | – Doesn’t expire – Low-risk cash value investment – Can be eligible for dividends | – Doesn't expire – Higher cash value growth potential compared to whole life | – Doesn’t expire – More control over cash value investments – High investment potential |
Main drawbacks | – Coverage expires at the end of the term | – Expensive premiums with little flexibility – Lower investment potential than other permanent products | – Higher investment risk than whole life – Policies can be canceled if they’re underfunded or investments underperform | – Highest investment risk – Often no guaranteed minimum return nor guaranteed death benefit |
Learn more about IUL vs. whole life insurance
Looking for life insurance options with large coverage amounts?
Consider shopping for a $1 million, $5 million or $10 million life insurance policy.
Irrevocable life insurance trusts (ILITs)
Trusts can enhance your estate plan when used alongside life insurance policies.
An irrevocable life insurance trust (ILIT) is a trust that can’t be altered or revoked once it’s issued.
An ILIT is a separate entity that can hold assets like a life insurance policy. It acts as the policyholder.
When you die, the death benefit is put into the trust. It then pays the proceeds to your beneficiaries according to your instructions.
An ILIT can be an effective way to pass wealth onto your children. It ensures that your beneficiaries can claim the policy proceeds quickly, and it keeps your life insurance proceeds out 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.
Learn more: Is life insurance a good investment?
Best life insurance companies for high-net-worth individuals
Company | Policygenius rating | AM Best rating | Best for | |
Lincoln Financial | 4.8/5 ★ | A | Term life insurance | |
MassMutual | 4.9/5 ★ | A++ | Whole life insurance |
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 circ*mstances at the most competitive price.
Read more about our reviews methodology
Best term life insurance for high-net-worth applicants: Lincoln Financial
2024 Policygenius award winner
Lincoln Financial
Policygenius rating
Our proprietary rating methodology takes multiple factors into account, including customer satisfaction, cost, financial strength, and policy offerings. See the "methodology" section for more details.
4.8
AM Best rating
AM Best is a global credit rating agency that scores the financial strength of insurance companies on a scale from A++ (Superior) to D (Poor).
A
Cost
Using a mix of internal and external rate data, we grade the cost of each insurance company's premiums on a scale from least expensive ($) to most expensive ($$$$$).
$
$
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$
No-medical-exam option
Why we chose it
Lincoln Financial offers a diverse array of life insurance policies, including competitive no-med and high-net-worth options.
Pros and cons
Pros
Affordable rates
Good for many existing health conditions, including depression, stroke, and heart conditions
Good for marijuana users, including daily users
Cons
Term life not available in New York
Read our full Lincoln Financial review
According to our analysis, Lincoln Financial offers some of the highest coverage amounts for term life insurance compared to other companies. You can buy up to $60 million in coverage from Lincoln Financial if your income and assets justify it.
Best whole life insurance for high net worth individuals: MassMutual
2024 Policygenius award winner
MassMutual
Policygenius rating
Our proprietary rating methodology takes multiple factors into account, including customer satisfaction, cost, financial strength, and policy offerings. See the "methodology" section for more details.
4.9
AM Best rating
AM Best is a global credit rating agency that scores the financial strength of insurance companies on a scale from A++ (Superior) to D (Poor).
A++
Cost
Using a mix of internal and external rate data, we grade the cost of each insurance company's premiums on a scale from least expensive ($) to most expensive ($$$$$).
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$
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$
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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
Read our full MassMutual review
In addition to having high coverage amounts available — $10 million or more — our analysis found that 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 2024
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How to buy life insurance if you have a high net worth
Determine how much coverage you need. The payout should be enough to help your beneficiaries cover all the expenses they’ll need to pay in your absence. You can use our life insurance calculator to help you get an estimate that factors in your income and assets. The amount of coverage you need may also determine where you buy your policy, since not every insurer offers payouts into the high millions. You may need to consider larger and more well-established companies if you need a very high coverage amount. See our picks above for the best life insurance companies for high-net-worth individuals.
Choose the best company for your health history. Every insurer weighs the risk of health conditions differently. For example, people with diabetes might get better rates with one company than with another. An independent broker can help you compare guidelines from multiple insurers. (If you’re applying for over $2 million in coverage, you’ll likely have to take the medical exam that’s a standard part of the application for life insurance regardless of your health status.)
Consider the company’s financial strength. Arguably the most important part of choosing an insurer is knowing it’ll be around to pay out a claim if you pass away. Applying with a company that has strong financial ratings will help ensure this.
Assign your beneficiaries. Most people choose family members to be the beneficiaries. But if you have significant assets and want to prevent your policy from contributing to estate taxes, you might make a trust your beneficiary instead.
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.
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How can you use life insurance to build wealth?
Term 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, term life insurance is more designed to protect wealth rather than to build it.
On the other hand, permanent life insurance can be used to complement an investment strategy, since you can access the cash value from your policy while you’re alive.
“If used properly, the proceeds [from a permanent life insurance policy] 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.
As a best practice, you can consult with a financial planner and a wealth manager to come up with a financial strategy that’s going to serve your needs when it comes to building wealth.
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Frequently asked questions
Do you need life insurance if you have a high net worth?
If you have people who depend on your income, you may benefit from a life insurance policy. Life insurance can also help cover estate taxes, so your beneficiaries can preserve their inheritance.
How does net worth affect life insurance?
Your net worth impacts how much life insurance coverage you can buy. If you have a higher income or net worth, you can buy more coverage, and vice versa. In general, your life insurance coverage should be proportional to your financial responsibilities.
Is life insurance considered an asset for people with a high net worth?
Whether your life insurance policy is an asset depends on whether you’ll financially benefit from the policy while you’re alive. Permanent life insurance policies can be considered assets because of their cash value. Term life insurance, on the other hand, 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 $13.61 million tax limit set by the IRS for 2024.
