Did you know that the average private placement life insurance case in the US is roughly $12.98 million, while the average net worth of the people buying it is over $100 million?
That is one reason why life insurance was "Designed by the rich, for the rich, to keep them rich" according to the latest podcast guest.
Watch the video below.
What is more, these wealthy individuals are often using life insurance for reasons that go far beyond the traditional death benefit.
Depending on the structure and jurisdiction, it can play a role in estate planning, liquidity, privacy, succession planning and transferring wealth between generations.
On this podcast, Adam is joined by Fred Belman, an advisor with decades of experience, who explains how wealthy families use these strategies and why some of the same principles can also apply to higher earners who have not yet accumulated significant wealth.
Wealthy families can use life insurance to create liquidity, support wealth transfer and maintain greater control over how capital reaches the next generation.
Instead of viewing insurance only as a payout after death, affluent families may consider what that capital can achieve within a wider wealth plan.
A death benefit can provide liquidity without requiring the family to immediately sell property, investments or a business. Certain permanent policies can also accumulate cash value that may be accessible during the policyholder's lifetime.
This helps explain why some wealthy families view life insurance alongside other assets. However, life insurance remains an insurance contract first rather than a replacement for investments intended primarily for growth.
Private banks primarily focus on managing and growing investment assets, while life insurance addresses a different set of financial needs.
Traditional private banking typically centers on:
Insurance planning can instead involve underwriting, beneficiaries, estate liquidity and succession.
This does not mean private banks deliberately ignore insurance. It may simply sit outside the traditional role of a relationship manager.
Tax treatment also varies. Life insurance should not be assumed to be universally tax-free, as residency, jurisdiction, ownership and policy structure can all affect the outcome.
Some principles used by wealthy families can also be relevant to high earners who have significant future earning potential but have not yet accumulated substantial wealth.
If they die early, their family receives what has already been accumulated rather than what they might eventually have built.
Life insurance can help address that gap by putting a predetermined death benefit in place while the person is still building wealth.
The idea goes beyond replacing current income. It can help protect the financial trajectory that person was working toward.
Coverage depends on underwriting, affordability, financial justification and insurer requirements, so large death benefits are neither automatic nor suitable for everyone.
Life insurance can provide beneficiaries with liquidity and, depending on the jurisdiction and structure, proceeds may pass directly to named beneficiaries without going through the ordinary probate process.
This can matter for international families that own property, businesses and investments across different countries.
A policy may provide liquidity while other parts of the estate are being administered, but the outcome depends on ownership, beneficiary arrangements, residency and local law.
Life insurance also cannot replace an estate plan. A policy can help fund a plan, but it cannot write a will, determine how a business should be divided or resolve inheritance disputes.
Life insurance can give heirs liquidity when selling other family assets would be difficult or poorly timed.
A family can be wealthy on paper while having relatively little cash available during an estate transition. Without sufficient liquidity, heirs may face several problems:
Insurance proceeds can provide another source of liquidity, giving beneficiaries more choice over what to keep, sell or transfer.
The value is therefore not only preserving wealth but preserving optionality.
A life insurance policy should solve a specific financial problem, remain affordable and be appropriate for the policyholder's circumstances.
One important distinction is between policy illustrations and contractual guarantees. Illustrations depend on assumptions, so buyers should understand which benefits are actually guaranteed.
Ownership, beneficiaries, premiums, underwriting and jurisdiction also matter, particularly for internationally mobile families.
Planning early can be important because underwriting and structuring larger policies may take time, while changes in health can affect the options available later.
Wealthy families can use life insurance for more than replacing income after death. It can provide liquidity, support estate and succession planning, and reduce the risk of heirs having to sell valuable assets at the wrong time.
The same thinking can also be relevant to higher earners who are still building wealth.
The bigger lesson from the interview is not simply that wealthy people buy life insurance. It is that they can use it to solve specific problems around liquidity, succession and wealth transfer that other assets may not solve on their own.