High-Net-Worth Life Insurance: Everything You Need to Know

High-net-worth life insurance provides wealthy people with coverage amounts large enough to handle estate taxes, wealth preservation and business succession.

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# High-Net-Worth Life Insurance: Everything You Need to Know

Written by Mark Fitzpatrick

Updated: February 12, 2026

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Key Takeaways

People with $1 million or more in liquid assets use specialized policies to pass wealth to heirs tax-efficiently, fund business transitions and create charitable legacies.

Life insurance protects high-net-worth estates from federal estate taxes (up to 40% on amounts exceeding current exemption thresholds) and applicable state inheritance taxes, providing tax-free liquidity to cover bills.

Term life offers temporary coverage. Permanent policies build cash value that grows tax-deferred and can be borrowed against tax-free.

Life insurance needs vary by individual circumstances. Consult with a qualified financial advisor or insurance professional to determine appropriate coverage for your situation.

What Is High-Net-Worth Life Insurance?

High-net-worth life insurance is a specialized coverage designed for people with $1 million or more in liquid assets. These policies work differently from standard life insurance. They offer larger death benefits, have more complex underwriting and provide additional features like premium financing, private placement options and trust structures.

Wealthy individuals qualify for high-net-worth insurance based on income, assets and net worth. Insurance companies consider total wealth, including investment portfolios, real estate holdings, business valuations and retirement accounts. The underwriting process is more thorough than standard policies and may include financial document reviews, medical exams and interviews.

These policies give your family immediate cash when you die. Without it, heirs may need to sell family businesses or properties to pay estate taxes within nine months. The death benefit arrives tax-free and covers these obligations while keeping estates intact.

Why Buy High-Net-Worth Life Insurance

When you've accumulated substantial wealth, traditional financial protection strategies may fall short of your needs. High-net-worth people buy life insurance to protect estates from federal taxes, fund business succession plans and preserve wealth for heirs.

Estate Tax Protection

The 2026 federal estate tax threshold is $15 million for individuals, with taxes up to 40% on excess amounts. Depending on the state, additional taxes with lower thresholds may apply. High-net-worth life insurance prevents heirs from liquidating assets to meet the IRS's nine-month payment deadline.

Tax laws change frequently. Consult a tax professional for current rates and thresholds.

Wealth Preservation and Transfer

High-net-worth life insurance policies pass wealth tax-free to beneficiaries. This becomes crucial if your estate is close to federal exemption thresholds.

Life insurance coverage protects illiquid assets, such as real estate and family businesses. Death benefits provide liquidity (readily available cash) to help heirs keep these assets. Permanent policies grow tax-deferred cash value accessible via tax-free loans.

Business Succession Planning

Life insurance can fund buy-sell agreements. Surviving owners can buy deceased owners' shares without draining capital. Key person policies provide tax-free death benefits to cover replacement costs and revenue losses.

Income Replacement for Dependents

Life insurance death benefits support family lifestyle and expenses like mortgages, tuition and living costs without asset sales. Life insurance replaces income from business ownership, consulting or other ventures that stop at death.

Cash Value Accumulation

Permanent life insurance builds tax-deferred cash value you can access via loans. If you maxed out qualified retirement accounts, such as 401(k)s and IRAs, use a permanent life policy to supplement your coverage needs.

Certain permanent policies, such as whole life and universal life, include guaranteed minimum interest rates. Indexed universal life policies generally offer a 0% floor that limits downside exposure but caps potential gains.

Legacy and Charitable Giving

Insurers let you name charities as life insurance beneficiaries. Charitable remainder trusts can work with life insurance to give you income for life while funding causes at death without shrinking family inheritance.

Types of Life Insurance for High-Net-Worth Individuals

High-net-worth individuals choose between term and permanent life insurance policies. Term life provides temporary coverage at the lowest cost, while permanent policies (whole life, universal life, variable life) combine death benefits with cash value growth.


Term	Temporary coverage for set period	Lowest premiums Simple structure No cash value	Short-term need Mortgage protection
Whole	Permanent coverage with fixed premiums	Guaranteed death benefi Predictable cash value Stable premiums	Estate planning Conservative investors Lifelong coverage needs
Universal	Permanent with flexible premiums	Adjustable death benefit Flexible payments Interest-bearing cash value	Changing income Estate planning Moderate risk tolerance
Indexed Universal	Tied to market index performance	Growth potential without direct market risk Floor protection Tax-deferred gains	Moderate growth goals Market participation without full exposure
Variable Universal	Cash value in investment subaccounts	Highest growth potential Investment control Tax-deferred gains	High risk tolerance Active investors Long-term wealth accumulation
Guaranteed Universal	Permanent with low cash value	Lowest permanent premiums Guaranteed death benefit Minimal cash accumulation	Estate tax coverage Maximum death benefit per dollar
Variable Life	Permanent with investment options	Death benefit can increase Investment flexibility Fixed premiums	Long-term investors Those seeking equity exposure Stable premium payers

How to Buy Life Insurance If You Have a High Net Worth

Buying high-net-worth coverage requires more planning than standard policies due to larger death benefits, complex underwriting and different structures.

1
Calculate your coverage needs
Add up your estate tax liability, outstanding debts, income replacement needs and legacy goals. Estate taxes of up to 40% on amounts above $15 million represent the largest need for most high-net-worth individuals. Include state estate taxes where applicable.
2
Choose the type of policy
Buy term life insurance for temporary needs. Choose permanent policies for estate planning and wealth transfer. Many use both: term for business coverage, permanent for estate taxes.
3
Compare insurance companies
Get quotes from multiple insurers specializing in high-net-worth coverage. Compare premiums, financial strength ratings (A.M. Best rating of A+ or higher), features and claims history.
4
Complete the application process
Submit financial documents (tax returns, balance sheets, income statements). Complete medical exams, which may include blood work, EKGs and physician interviews. Underwriting (the insurer's evaluation process) is more thorough than standard coverage.
5
Review your policy and make premium payments
Check death benefits, premium schedules and beneficiary designations before accepting. Set up automatic payments to avoid lapses. Review coverage regularly as your estate or family circumstances change.

Strategic Uses of High-Net-Worth Life Insurance

High-net-worth policies support advanced estate planning strategies. Irrevocable life insurance trusts (ILITs) remove death benefits from taxable estates, life insurance retirement plans (LIRPs) build tax-free income and buy-sell agreements fund business succession.

Irrevocable Life Insurance Trusts (ILITs)

ILITs remove death benefits from your taxable estate. The trust owns the policy, so the death benefit proceeds don't count toward estate tax thresholds.

The trustee manages premiums and distributions, and can loan money to your estate for tax payments while keeping valuable assets in the family. Work with an estate attorney for proper setup.

Life Insurance Retirement Plans (LIRPs)

LIRPs build tax-deferred cash value by overfunding permanent policies beyond minimum premiums. Access this through tax-free policy loans for retirement income without triggering taxes. Unlike 401(k)s and IRAs, LIRPs have no contribution limits, letting high earners shelter additional income after maxing out qualified plans.

Life Insurance for Business Owners

Buy-sell agreements funded by coverage let surviving owners buy deceased owners' shares, preventing forced sales or outside investor involvement. Key person insurance replaces lost income when critical employees die, with tax-free death benefits covering recruitment costs. Coverage also handles commercial loans requiring full repayment when an owner dies.

High-Net-Worth Life Insurance: Bottom Line

High-net-worth life insurance serves estate tax mitigation, wealth preservation, business succession, and charitable giving for people with $1 million or more in liquid assets. These policies range from term (temporary, affordable) to permanent (whole life, universal life, variable life) with cash value.

Work with insurance professionals, estate attorneys and financial planners for a personalized strategy. Get quotes from multiple insurers to find the best rates and features.

High-Net-Worth Insurance: FAQ

What net worth is considered high for life insurance purposes?

High net worth means $1 million or more in liquid assets (investment portfolios, cash accounts, securities). Ultra-high net worth is $30 million or more. Insurers consider total wealth, including real estate, business valuations and retirement accounts.

Can I borrow against my life insurance policy?

Yes, if you have permanent life insurance. Permanent policies with cash value allow tax-free loans without income taxes or withdrawal penalties. Loans don't require credit checks, offer flexible repayment and can remain outstanding until death when death benefits repay them.

Should high-net-worth individuals choose term or permanent life insurance?

It depends on your goals. Term life works for temporary needs (mortgage protection, business loans). Permanent policies serve estate planning and wealth transfer through guaranteed death benefits and cash value.

You can use both for comprehensive coverage. Use term life insurance for business coverage and a permanent policy for estate taxes.

About Mark Fitzpatrick

Mark Fitzpatrick, a Licensed Property and Casualty Insurance Producer, is MoneyGeek's resident Personal Finance Expert. He has analyzed the insurance market for over five years, conducting original research for insurance shoppers. His insights have been featured in CNBC, NBC News and Mashable.

Fitzpatrick holds a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He's also a five-time Jeopardy champion!

He writes about economics and insurance, breaking down complex topics so people know what they're buying.

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sources

Internal Revenue Service. "Estate Tax." Accessed February 11, 2026.