How Much Does a 10 Million Dollar Life Insurance Policy Cost?

November 19, 2020
Jonathan Fritz
B.A. Risk Management
Life Insurance Agent

A life insurance policy protects your loved ones in the event of your death. The coverage you need depends on your circumstances. Most advisors recommend a policy worth at least ten times your income.  According to the United States Bureau of Labor Statistics, the average annual salary in America was $53,490. So, policies between $500,00 and $750,00 are common. However, factors like a mortgage or educational expense can make a strong case for a million-dollar policy.

What if your income or net worth is significantly beyond the average? People with a high income need a high life insurance policy to cover their families. In these cases, a policy of 10 million dollars might make sense.  If you're wondering who needs a 10 million dollar policy, how to secure one, and what they might cost, read on. 

Life Insurance Rates for a $10,000,000 Policy

The rates below are for a 50 year old male in great health. 

Company Name Coverage Amount Term Length Price
Principal Financial Group $10,000,000 20 $1,447.54
Protective Life $10,000,000 20 $1,445.34
Lincoln Financial $10,000,000 20 $1,491.88
Sagicor Life Insurance $10,000,000 20 $1,537.21
AIG $10,000,000 20 $1,461.79
Prudential Financial $10,000,000 20 $1,538.69
Mutual of Omaha $10,000,000 20 $1,527.58
Pacific Life $10,000,000 20 $1,511.59
Banner $10,000,000 20 $1,543.55
North American Company $10,000,000 20 $1,603.58

How to Get a 10 Million Dollar  Life Insurance Policy

picture of money

The basic process for getting life insurance is the same no matter if you're after a 10 thousand or a 10 million dollar policy. You'll need to get quotes, apply for coverage, take an exam, and wait for a decision. However, the process will take longer when you're seeking a 10 million dollar policy, and the requirements of each step will be a  little more complicated. 

Your first step will be searching for life insurance companies that offer 10 million dollar policies. Some companies have limits on how much coverage you can get, so you need to find companies that offer very large policy amounts.  You can research each company to see if they meet your needs and if you'll fit their underwriting standards. From there, you can get quotes and apply for a policy.  Since you're buying such a large policy, the insurance company might ask you for more information during your application, ask you for more tests at your life insurance exam, or both. 

While you can do all that yourself, it's a good idea to work with an agent when you're looking to purchase a policy this large. An experienced agent who has handled policies this large in the past can help guide you in the right direction. Your insurance agent will know which companies and policies are best for you, and will help you through any extra steps that come up during the application process. If you're in the market for a 10 million dollar policy, you can give us a call today at  888-407-0714. One of our friendly, experienced agents would be glad to help you find and apply for the right policy for you. 

Getting the best rate

Requirements for Buying a 10 Million Life Insurance Policy

Not everyone will qualify for a 10 million dollar life insurance policy. You'll need an income that supports the policy. That doesn't just mean being able to afford your premiums. It means that your income will have to justify why you'd need such a large coverage amount. After all, a life insurance policy is meant to replace your income, not increase it.

Overall, you'll need to show you have what's called insurable interest. Insurable interest means that the policyholder benefits from the existence of the subject of the insurance and would suffer a loss if it no longer existed. In some cases, this is pretty self-explanatory. You have an insurable interest in your car or your home because without them you'd be out the cost of them. Plus, you'd need to spend money to replace them. 

When it comes to life insurance this might seem more complicated, but the same principle applies. You buy life insurance to prevent your beneficiary from financially suffering in the event of your death. When you apply for a 10 million dollar policy you're claiming that your beneficiary needs 10 million dollars in coverage to not suffer a loss should you die. That's insurable interest, and you'll need to be able to prove it to get approved for a 10 million dollar policy. 

Reasons for Buying A 10 Million Dollar Life Insurance Policy 

You'll need to show a valid reason for buying a 10 million dollar policy. There are a few reasons that an insurance company will accept. You'll need to provide different proof and meet different standards for each of them. 

Income Replacement 

One of the primary reasons for buying a 10 million dollar policy is to replace your income. What kind of income do you need? It depends on a few things, including your age. Your age matters, because the insurance company will look at your current age and multiply it by how much longer you'll be working to get a coverage amount. So while someone under 30 will probably be working for another 40 years, something in their 50s will only be working for another 15 or so. That means you'd need a much higher income to justify a 10 million dollar policy at 55 than you would at 25.

The exact numbers will vary depending on the company and other factors, but in general, you'll need to make at least $250,000 a year if you're under 30 to qualify for a million-dollar policy. Conversely, you'd need an income of a million a year to justify the same policy at 60.  Plus, most companies won't allow you to pay more than 5 or 10 percent of your income a year in life insurance premiums. 

Estate conservation

Another reason to purchase 10 million dollars in life insurance is to protect your family from the high taxes that can be involved in transferring your estate to another person. An estate transfer can come at a high tax burden. In fact, taxes can be as much as 40 percent on estates of over 5 and half-million dollars. Families sometimes end up selling homes and other pieces of estates because they can't afford the taxes on them. 

You can buy a large policy to help offset this cost. The insurance company will look at the current value of your estate and calculate its future worth. Just like with income replacement, your age will play a factor. Generally, companies estimate growth using an interest rate of five to ten percent. Your estate will have a lot more time to grow in worth if you're 30 than if you're 65, and the calculations will reflect that. 

Key Person

A key person is an employee a company suffers without. A company can take out insurance on the person to protect them from loss should that employee die.  This key employee can't be the business owner. As a rule, you can take out insurance for about five to ten times the annual salary of your key employee. So for a business to take out a 10 million dollar insurance policy on a key employee, that person would need to earn an annual salary of between one and two million. Remember, this also news to meet the insurable interest rule. So a company will need to provide financial records that prove they'd suffer a loss without this employee. 

Buy-sell agreement

A buy-sell agreement is an agreement between a business owner and another person to sell that other person the business after the owner's death. In this type of agreement, the other party is the beneficiary of the life insurance policy on the business owner for the worth of the business. If the owner dies, the other person uses the funds from the policy to buy the business from the person's estate. 

The agreement allows the business to be passed down to another person. The business will need to be worth at least 10 million dollars to take out a 10 million dollar policy on it. The insurable interest, in this case, is the continued existence of the business. 

Jumping Through Hoops and Meeting Requirements

As we talked about above, it's not always easy to secure a 10 million dollar policy. You should be prepared to supply additional documentation that proves your assets and incomes. Examples include:

  • Your W2s
  • Your tax returns
  • Your financial statements
  • Letters from your accountant
  • Letters from your attorney 

What you'll need to prove depends on your reason for the policy. For example, you'll need to prove yearly income for income replacement, but you'll need to prove the value of your estate if your reason is estate preservation. The company will look at your information very closely to determine if such a large policy is really needed. As a result,  underwriting for your policy might take longer than normal. It can take three to five weeks to secure a 10 million policy. 

You also need to be prepared to take a more comprehensive medical exam. Beyond the standard blood work, companies might ask for the following things when you're trying to secure a 10 million dollar policy:

  • An EKG
  • A stress test
  • A health statement from your physician

This will likely depend on your age and health. For example, an insurance company is a lot less likely to ask younger applications to take a stress test as part of their application. 

Final Thoughts

Securing a 10 million dollar policy is a little more complicated than securing a standard policy, but it's not impossible. Give our agents a call today at 888-407-0714 and let us help you find the right policy to protect your family, estate, or business.