Life Insurance for High-Net -Worth Individuals (HNWI)

Life insurance for high net worth individuals may include tax savings or financial investment opportunities. Find a larger life insurance company that can afford the risk of paying out benefits 10-15 times the high net worth individual's income. Life insurance can also cover any final and uncovered medical expenses not covered by a health insurance policy, personal debts, and business debts to preserve the family’s accustomed lifestyle.

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Natasha McLachlan is a writer who currently lives in Southern California. She is an alumna of California College of the Arts, where she obtained her B.A. in Writing and Literature. Her current work revolves around insurance guides and informational articles. She truly enjoys helping others learn more about everyday, practical matters through her work.

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Laura Walker graduated college with a BS in Criminal Justice with a minor in Political Science. She married her husband and began working in the family insurance business in 2005. She became a licensed agent and wrote P&C business focusing on personal lines insurance for 10 years. Laura serviced existing business and wrote new business. She now uses her insurance background to help educate...

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Reviewed by Laura Walker
Former Licensed Agent

UPDATED: May 2, 2021

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The Rundown

  • Larger life insurance companies can take on the financial risk of paying multi-millions of dollars
  • Either term or whole life insurance policies may cover your financial needs
  • Wealthy individuals can shop for tax savings or investment opportunities

When you have a certain amount of money, it’s not unusual to believe you don’t need life insurance. You might consider yourself essentially self-insured.

However, high net worth individuals usually have high living expenses and debts along with their high income. There are options to choose from with life insurance for high net worth individuals.

Learn more about life insurance before you purchase any coverage.

Life insurance isn’t just for covering expenses in the transition period after a death. Explore your options before you buy high net worth life insurance with just your ZIP code.

What is the best type of life insurance for high net worth individuals?

The best life insurance company depends on your financial needs and why you’re buying life insurance.

You may want a company that offers term life insurance with death benefits large enough to replace your income.

You could want enough coverage to account for estate taxes to protect your assets. Or you may even want a cash value life insurance to grow your tax-deferred savings.

Even so, you don’t want to pay too much or have more life insurance than you need. Match your coverage with specific needs.

Term Life Insurance for High Net Worth Individuals

Term life insurance is usually the most cost-effective. The life insurance rates are low so it allows you to buy more coverage for a specified period.

Experts recommend buying life insurance that covers 10-15 times your income. Not all life insurance companies can pay that kind of death benefit. Look to the larger life insurance companies.

The right life insurance company will depend on the size of your wealth. Loved ones will need to pay estate taxes of up to 40%. Find the most affordable life insurance policy with a death benefit equal to or greater than the anticipated tax burden to pay for that.

Whole Life Insurance for High Net Worth Individuals

Whole life insurance lasts until the end of your life and can leave additional funds for your beneficiaries. This does mean it costs more though.

High-earners that already maxed out other tax-deferred savings accounts could enjoy the cash value component that gains value. Cash value accounts are relatively protected from the stock market.

Traditional investment accounts offer greater returns but the cash value account’s returns will be consistent. A whole life insurance investment may be right for you.

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Do high net worth individuals need life insurance?

If you’ve saved enough money, you might be able to self-insure. But, it’s unwise to assume your comfortable lifestyle now won’t need financial protection in the future.

If you have assets greater than $11.70 million, per the IRS, estate taxes could decrease the inheritance your loved ones receive. A life insurance death benefit is almost always exempt from taxes.

So a life insurance death benefit coverage can pay the estate taxes to protect the inheritance. Historically, estate taxes are one of the primary reasons high net worth individuals have life insurance.

The federal estate tax isn’t the only tax you’ll want to consider. At least a dozen states have estate tax thresholds much lower than the federal limit.

Life insurance can also cover any final and uncovered medical expenses not covered by a health insurance policy. Any unpaid personal and business debts may also disrupt the family’s accustomed lifestyle.

You may feel financially secure now, but high net worth insurance adds a layer of protection for paying down estate taxes or building more wealth.

Wealthier individuals may be motivated by potential tax savings or the opportunity to use life insurance as an investment, but anyone has access to these benefits. You may need life insurance regardless of your net worth if you:

  • Have anyone dependant on you, like a spouse or children,
  • Are the primary source of income for the household,
  • Have a special needs dependent,
  • Owe co-signed debts, or
  • Want to leave behind money for funeral or burial expenses.

If you’re interested in providing financial security for anyone you’ll leave behind, compare affordable high net worth life insurance rates when you enter your ZIP code today.

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