Life insurance is most often used to replace lost income for immediate and future expenses. A high-net-worth individual may not see a reason to purchase a life insurance policy, but it can actually be used as a tool of investment, can protect an inheritance and can provide an additional financial cushion for their loved ones. Learn more about the best life insurance options and why it can be a good idea for high-net-worth individuals to consider buying.
Why do rich people need life insurance?
Life insurance can be used by wealthy individuals as a way to maximize their after-tax estate and accumulate more money to pass on to their loved ones. Learn more about the ways in which life insurance can be beneficial if you have a large amount of money.
Life Insurance is an Asset
A permanent life insurance policy like whole life insurance also has a cash value function alongside the lifetime coverage and death benefit. If the coverage is no longer needed, the policy can be sold as a life settlement.
Life Insurance for Business Owners
Life insurance for business owners is a must, as not only are your loved ones dependent on you, but also your employees and business partners. Income replacement and debt protection are extremely important for business owners. If your business has multiple owners, you can likely combine life insurance to work on a buy-sell agreement.
Life Insurance as a Retirement Strategy
A life insurance retirement plan—or a LIRP—is when you supplement your retirement savings and help minimize the taxes in retirement through tax-free loans against the cash value. Retirement accounts can be taxed both as income and then with an estate tax. The death benefit from a life insurance policy is provided to beneficiaries free of income tax.
What is the best life insurance for wealthy individuals?
The best life insurance for wealthy individuals depends on your financial situation and why you are purchasing life insurance. Consider the following types of coverage:
Term Life Insurance
Term life insurance is a great option for most people because of its simplicity and affordability. Unlike a permanent life insurance policy, it does not accumulate a cash value. A term life insurance policy could be a good option if your goal is to cover the cost of your estate taxes.
Cash Value Life Insurance
Cash value life insurance (also called whole life insurance) is a great form of life insurance for wealthy individuals, as it’s a way to have tax-deferred savings, especially if you’ve maxed out other retirement accounts. The cash value portion of whole life insurance can be used to supplement retirement income and a variety of other ways.
Who else needs life insurance?
If anyone relies on your income or your loved ones could be left with unexpected bills and payments if you were to pass, then you most likely need life insurance. People who fit the following profiles typically look for life insurance coverage:
- Recently married
- Starting a family
- Just bought a house
- Business owners
Find the Right Life Insurance Policy to Cover Your Net Worth
At SelectQuote, we can help you figure out what type of life insurance policy and how much life insurance is right for you. We’ll get to know more about your lifestyle and situation to find the right kind of coverage for you.