The Maximum Life Insurance Coverage Amount

Written by Jack Davis

It is not uncommon that we are asked what the maximum life insurance coverage amount someone can apply for in life insurance coverage. While we can give some answers, it really depends on several different factors.

maximum life insurance coverageIn this article, we’ll help you to understand what factors are considered so you can best analyze your own situation.

We offer a wide array of companies including those who offer guaranteed issue life insurance policies or life insurance for pregnant women, so do not hesitate to ask for help with any special circumstance.

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Remember, information required can differ from carrier to carrier, but most of the information contained here can be used as a general guideline. There are also exceptions which can be made if you can show sufficient evidence for obtaining the coverage.

Maximum Life Insurance Coverage Guidelines

Okay, here is the answer to: “Well, what’s the maximum life insurance coverage you think I can be approved for?

Realistically, it’s different for everyone so we cannot provide you an exact amount. With a few pin-point questions from us, we can usually determine an accurate estimate for what you may be entitled to apply for and have reasonable expectations for you being accepted.

Here are a few topics which help to identify what your personal maximum life insurance coverage amount might be:

  • Age
  • Debts
  • Income
  • Estate
  • Purpose
  • Insurability

Your Age When Applying For Life Insurance

While age isn’t a primary factor, it can be a deterrent for some companies to issue a larger policy for certain ages.

For example, it would be quite difficult to prove a reason for a substantial life insurance for a child at age 0 without very good underlying reasons. It’s common to insure a child, and little to no underwriting is necessary for average size policies. However, a multi-million-dollar policy on a child would be tough to stomach for any carrier without clear justification. It’s not impossible, but the insurable interest must be there.

While obtaining a life insurance policy on a younger child can be easy due to age and health, the opposite is true for senior adults.

how to get the max life insurance coverageFor example, if you are looking for life insurance for parents over 80, this may be a more daunting task, and much costlier. Though it is not impossible, it will come at a price. However, it is a wise financial strategy to purchase life insurance for your parents. The money you will receive is guaranteed, risk-free and tax-free. These are three peace of mind features you cannot duplicate in the risky, unpredictable stock market nowadays.

Your Amount of Debt When Applying For Life Insurance

Debts are easier to justify when applying for a maximum amount life insurance policy and can even be a requirement for certain types of loans. Since there is a clear reason for the lender to have interest in you paying back the loan, a show of loan documents may often be enough to let the insurance company move forward with your life insurance application.

If this is the case, the maximum life insurance coverage you’ll be able to seek won’t generally exceed what you owe plus any personal life insurance you could otherwise be entitled to. It is important to note that the beneficiary may be restricted to only the lender.

Your Amount of Income When Applying For Life Insurance

Income is the most common reason for which we see a maximum life insurance coverage benefit being established. Obviously, there would be no reason for a person who makes minimum wage to request a life insurance policy in the millions if it were strictly based on replacing one’s income. The insurable interest requirement simply isn’t valid. While some exceptions could be made here, something other than income would need to be presented to alter the decision. Perhaps the insured has large debts for an example. Also, the income multiplier used varies from company to company and is based on the age of the applicant.

A person aged 30 might be able to get as much as 20x their income from one company or as much as 25x from another. Yet, a person aged 50 might only be able to get 10x their income.

Your Estate Obligations When Applying For Life Insurance

Having a sizable estate is the most common reason for needing to increase the maximum life insurance coverage amount for someone in their later years.  In order to meet the looming tax burdens of an estate when a person passes, life insurance is often the best tool to leverage dollars now for tax-free dollars later. Having a sizable estate may create a huge tax bill upon death.

Life insurance has proven time and again it is an excellent vehicle to purchase to pay off estate taxes in a financially prudent manner. Survivorship life insurance, also known as “Second-to-die” life insurance is an often-used strategy to fund estate taxes.

Your Purpose For Applying For Life Insurance

The purpose of the life insurance policy can sometimes make or break your ability to buy a life insurance policy at a high death benefit amount. The purpose of the policy is what helps to establish the insurable interest, meaning a specific reason for requesting your coverage.

The purpose of a policy can range widely, from the family needing basic income to business succession planning to charitable giving. There really aren’t limits to what could possibly be a purposeful reason for an insurance policy, but it must have a numerical value to which the insurance company can clearly see.

Your Insurability When Applying For Life Insurance

Lastly, your personal insurability can certainly be a deal breaker.

If you can’t medically qualify for a traditionally underwritten life insurance policy, your maximum life insurance coverage available to you will be whatever you can purchase on a guaranteed issue basis, or as part of a survivorship plan. Your good health is the key!

Just because you have a reason to qualify doesn’t mean you can buy life insurance in large amounts. If your health is too poor most companies will consider you as a high risk and may decline your application. There are now companies offering up to one million dollar no exam life insurance policies.

Again, please be aware, a no exam life insurance policy doesn’t mean no medical questions will be asked.  Your medical history will be relevant during the underwriting process. 

Carriers often specialize in a certain client, such as those seeking life insurance for morbidly obese. Whatever your situation may be, we are here to help you find a policy to fit your needs and your budget.

When you’re looking to buy maximum life insurance coverage for yourself, your estate, or business, we can help you not only establish the insurable need, but we can assist you with quotes and companies as well. We work for our clients, not an insurance company, all at no cost to you.   Give us a call or use our convenient life insurance quote form to provide instant quotes online.

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Eric BUrkholz

Again, please be aware, a no-exam life insurance policy doesn’t mean no medical questions will be asked. Your medical history will be relevant during the underwriting process.

Very good info.

I am a broker for auto and home, but it’s good to know that to always prep the policyholder for this beforehand. Thanks.

August 20, 2019 at 8:26 pm
Eric Burkholz

really important to have this established on an income basis. You can’t buy more than you can afford and you also can’t be underinsured.

November 29, 2019 at 12:03 pm
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