While you might be able to self insure, there are a few reasons why you might want to consider buying life insurance. These include:
Cover estate taxes
If your estate is valued at $11.58 million or more — the IRS threshold for 2020 — it will be subject to federal estate taxes. Your heirs will only have nine months to pay the tax after your death. To prevent them from having to sell off other assets, you could take out a life insurance policy to help your heirs pay the tax bill.
Settle your debts
Even though you’re wealthy, you might have outstanding loans or business-related debts. You could ease the burden on your beneficiaries by purchasing a life insurance policy that’s large enough to cover any debt you’re leaving behind. That way, they won’t be forced to liquidate assets or dip into their own accounts.
Protect your business
There are a few ways life insurance can protect your business.
- If your business would financially suffer if you died unexpectedly, you could consider buying a key man insurance policy to help your company stay afloat until a replacement is found.
- If you take out a loan to finance your business, a policy could take care of repayments.
- You could cover a buy/sell agreement if you have co-owners or business partners.
Help your beneficiaries maintain their lifestyles
As a high net worth individual, chances are your loved ones have become accustomed to a certain lifestyle. A life insurance policy could give them the funds they need to cover their living and lifestyle expenses without having to sacrifice anything.
Leave a legacy
The primary purpose of life insurance is to replace your income when you die. You could go one step further and leave a healthy inheritance to your children and grandchildren. Depending on your provider, you might be able to stagger the payout so your beneficiaries receive a payment every month, year or few years.
Best life insurance companies financial strength
As a policyholder, you need to be able to rely on your insurer to pay out your claim when you die. All five insurers on our list score top ratings with the major agencies, which means they have the cash reserves to meet their financial obligations.
In J.D. Power’s latest study on customer satisfaction, Prudential ranked eighth of 23 insurers surveyed. MassMutual placed ninth, Lincoln Financial eleventh, and John Hancock fourteenth. AIG has a little work to do in the customer service department, ranking second-to-last.