Life insurance solutions for the wealthy

“I’ve Got Plenty of Money,” said no one ever. Life Insurance solutions for the wealthy.

How would you feel if you had to suddenly pay hundreds of thousands or even millions of dollars out of pocket? What if someone told you you weren’t going to have anything left to leave your family? Life insurance helps preserve your wealth so you can leave a legacy for your loved ones.


Paying Estate Taxes

When someone passes away, their heirs have up to nine months to file an estate tax return. A six-month extension is available, but the full estate tax needs to be paid by the original deadline, or interest will start accruing.

The estate tax rate goes as high as 40 percent. Do you have 40 percent of your assets in cash or liquid investments? Thirty percent? Twenty percent? Even ten percent?

The IRS isn’t going to wait to be paid. Your estate’s executor will need to sell off real estate, stocks, or other investments to cover the tax bill. If it’s a down market, your heirs won’t be able to wait for a rebound. The assets will be sold at a loss, and their inheritance will be reduced.

Having a life insurance policy in place creates additional cash to cover estate taxes and other final expenses. Life insurance is the perfect solution for the wealthy.

Covering Medical Bills

The costs of end-of-life medical care are staggering. Intensive care costs up to $10,000 per day. Average per capita end-of-life treatment costs approach $100,000 depending on the location. Nursing home treatment averages almost $7,000 per month, and assisted living costs about half of that.

Add in a serious disease and the need for long-term treatment, and you’ll be well above those averages — possibly in the millions.

The good news is that debts aren’t inherited. If you leave behind unpaid medical bills, they won’t transfer to your children and grandchildren.

The bad news is that your estate must repay your debts. Any wealth you’ve accumulated must first go to repaying your outstanding debts in full before your heirs receive anything.

Life insurance can once again cover these costs so your estate can remain intact.

Additional Tax Benefits

There are several situations where life insurance and death benefits provide additional tax benefits:

  • Direct payouts to beneficiaries: Your beneficiaries do not pay income taxes as long as neither you nor your estate had any right to the life insurance proceeds. These amounts are also not included in your estate’s value for estate tax purposes.

  • Spousal transfers: Any property left to your spouse is excluded from estate taxes. This includes when your spouse has the right to your life insurance proceeds.

  • Estates under $5.45 million: If the total value of your estate, after debts are subtracted and life insurance proceeds are added, is less than $5.45 million, there is no federal estate tax. This lets you use life insurance to pay off any medical or other debts without subjecting your estate to extra taxes.


There are two common life insurance policy types that can help you preserve your wealth.



Term life insurance provides coverage for a fixed period of time at relatively low rates. At the end of the term, coverage expires unless you exercise an option to renew the policy at additional cost.



Cash-value-accumulation life insurance is part insurance and part savings vehicle/retirement account. You receive a death benefit at any age and also have the option to withdraw part of the policy’s value to cover unexpected expenses while you’re still alive.

Depending on where you are in life, it’s often ideal to use a combination of both policies just as you would diversify your investments. To learn more about life insurance solutions for the wealthy, contact us today.