Why the wealthy still use life insurance
Over the years, I’ve sat across the table from many people who would easily qualify as wealthy—successful entrepreneurs, senior executives and families with businesses, properties and investments that most people only read about. Their balance sheets are solid. Their lifestyles are secure. On paper, they’ve already “won.”
And every now and then, someone asks a question that sounds logical on the surface: “Randell, do people like this still need life insurance?”
It’s a fair question. After all, if you already have money, assets and investments, why add another financial product into the mix? Why keep paying premiums when you can self-insure?
But that question assumes life insurance is about getting rich. It isn’t.
What I’ve learned over time is this: the wealthier the person, the clearer their reason for keeping life insurance. Their objective has very little to do with wealth building—and everything to do with protection, order and legacy.
I remember one conversation in particular. The client had already reached financial independence. His businesses were profitable. His investments were well diversified. His lifestyle was secure. Life insurance, to him, felt almost unnecessary—until we talked about one uncomfortable question: What happens if you don’t wake up tomorrow?
That’s when the room went quiet. He wasn’t worried about himself. He was thinking about his wife, his children, his employees and his business partners. He knew something many people overlook: wealth on paper doesn’t automatically translate to cash in hand at the exact moment it’s needed.
This is where wealthy people tend to think differently. They understand that income protection never truly becomes irrelevant. Even when assets are substantial, income streams are often tied to a person—especially in closely held businesses. Remove that person, and cash flow can dry up faster than anyone expects. Deals stall. Clients hesitate. Employees panic. Families are left with assets but no immediate liquidity.
Life insurance solves a problem investments cannot. It delivers cash immediately, without selling anything at the wrong time. No scrambling. No fire sales. No rushed decisions while emotions are raw. It buys time—and time, in moments like these, is priceless.
I’ve also noticed that wealthy people are unusually focused on one thing most people ignore: personal risk. Not market risk. Not volatility. But the risk that a single event could undo decades of disciplined work.
They don’t see insurance as pessimism. They see it as prudence.
The bigger the estate, the more fragile it can be if not structured properly. Wealth often sits in illiquid forms—real estate, businesses, long-term investments. Life insurance transfers the financial shock of death away from the family and toward an institution designed to absorb it.
That’s not fear. That’s strategy.
Estate planning conversations make this even clearer. Many affluent families are asset-rich but cash-poor at death. Properties, businesses and investments may look impressive on a balance sheet, but estate taxes, settlement costs and legal obligations demand cash—and they demand it quickly.
This is where I’ve seen families forced into painful decisions. Selling properties they wanted to keep. Breaking up businesses they hoped would continue. Settling estates in ways they never intended, simply because liquidity wasn’t available when it mattered most.
Wealthy families who use life insurance avoid that scenario altogether. Insurance provides liquidity exactly when it’s needed, preserving the estate instead of dismantling it. It allows heirs to make thoughtful decisions rather than desperate ones.
But the most meaningful conversations don’t revolve around taxes or liquidity. They revolve around legacy. At a certain point, wealthy people stop asking, “How much more can I make?”
The better question becomes, “What will my money say about me when I’m gone?”
I’ve seen life insurance used to fund scholarships, support ministries, establish foundations and ensure that generosity continues long after a person’s last breath. Because insurance payouts are predictable and efficient, families can give intentionally—without jeopardizing the rest of the estate. In those moments, life insurance stops being a product. It becomes a statement of values.
What stands out to me most is this: people who truly understand wealth don’t obsess over accumulation. They think in terms of stewardship. They know that money, influence and opportunity are entrusted to them temporarily. Their responsibility is not just to grow what they’ve been given—but to guard it, direct it wisely and pass it on well.
That’s why wealthy people still use life insurance. Not because they need help getting rich. But because they’ve learned what’s worth protecting.
And perhaps that’s the real lesson for the rest of us. Financial wisdom isn’t measured by how much we make or how impressive our portfolios look. It’s measured by how thoughtfully we prepare for the day we’re no longer here—and how well we care for the people and purposes that matter most when we’re gone. INQ
Randell Tiongson is a Registered Financial Planner of RFP Philippines. To learn more about personal financial planning, attend the 115th RFP program this March 2026. Email info@rfp.ph or visit rfp.ph to learn more about the program.
