With President-elect Donald Trump proposed for the elimination of the estate tax in the US, most people would think that rich people with huge estates need not buy life insurance anymore. This is because life insurance is mostly purchased for huge estate taxes that come to play nine months after the death of the estate owner. In most cases, the family does not have the cash at hand to pay the taxes. The estate owner will therefore get a life insurance policy to provide money to pay the tax and to prevent the children from having to sell property to be able to meet the estate taxes. However, this is not the sole reason why the rich purchase life insurance. Here is a list of other perks of life insurance that are equally important:

Taking up loans

One reason that drives the uber-wealthy into taking up life insurance is to be able to obtain loans. With life insurance, they can take up loans which are not subject to taxes. They also enjoy low-interest rates. Now, these loans are to be paid in full once the borrower dies. If they were to die before completion, their assets would not be liquidated. Various entrepreneurs are recorded to have built or saved their businesses on the back of life insurance. For example, Walt Disney built his amusement park by borrowing a large part of the money with the cash value of his life insurance as collateral. Earlier on, he had failed to secure any financing.

Estate equalization

Another reason billionaires purchase life insurance is for estate equalization. The assets that these people own might not be readily liquidated and thus difficult to share equally among their children. However, with life insurance, they can achieve financial fairness.


Billionaires also opt for life insurance because of the privacy it provides. It protects the monies involved in the policy and also prevents the funds from being subject to unjust lawsuits.

Corporate benefits

Taking up life insurance comes with some tax advantages which are in most cases leveraged by companies, especially those owned by the super-wealthy. They leverage these tax advantages into paying key employees and paying for specific corporate benefits.

Benefits to business owners

Life insurance policies are excellent sources of funds during buy/sell agreements, and instead of having to borrow money or take up loans, it can fund the process. Additionally, business owners rely on life insurance for key person policies.

Even with estate tax getting eliminated, the future of life insurance is still bright because the super-wealthy continue to benefit greatly from it.