This is a great question as Life Insurance can be used to do a number of wonderful things:
- They are sick of not earning any money on their bank account/cash/emergency fund money
Use Single Premium Universal Life Insurance with Full Return of Premium to average 2–4% with a death benefit and possibly Long Term Care benefits. More information here:
- Because they are sick of losing money when the stock market goes down.
Use Indexed Universal Life Insurance that is linked to the S&P 500. At the writing of this answer you lose no money when the market goes down but make the first 11–13% of the S&P 500 gains when the market goes up. More information Here:
- Because they think taxes will be higher in the future.
Use Whole Life or Universal Life to build cash value and then take Tax-Free distributions from the policy to use to pay bills during your retirement years. More information here:
- Because they want their spouse/children to keep receiving income if they pass away.
Use minimum premium Whole Life, Guaranteed Universal Life or Term Insurance.
- Because they want Long Term Care benefits. Many companies will allow you to use the death benefit while you are still alive if you need it for Long Term Care expenses.
Here’s the key
You, even millionaires should invest in life insurance, read more on why it is is so important here!
Build your Retirement Plan properly FIRST and THEN go back and ask yourself if you have enough insurance in the areas that you need it.
Having money in the bank for an emergency and a bunch of money in mutual funds for growth is not a financial or retirement plan.
Hope is not a plan.
A properly structured plan will include many life insurance and annuity products to accomplish the goals listed above and then possibly some stocks or mutual funds for growth.
Remember, you need three types of money to make it successfully to and through retirement:
- IN-Case (Urgency Fund and Emergency Fund)
- IN-Come (Social Security, Pensions, Annuities, Rental Income)
- IN-Crease (Stocks, Bonds, Mutual Funds, Real Estate, Growth Annuities, Cash Value Life Insurance, Etc.)
You FIRST build your “Three INs Plan” and then you test it with The Five Lives of Retirement Test. Listen Here:and the four episodes following this one.
The Five Lives Test will tell you if you need any more life insurance.