Do I Still Need Life Insurance? How Layering Coverage Can Make It Cost-Effective

Many people reach their 50s or 60s and wonder if life insurance is still necessary. Maybe the house is paid off. The kids are out of college. The retirement accounts are well-funded. It’s a fair question, but it’s not just about whether you need life insurance. It’s about whether it still plays a strategic role in your financial plan.

For high-net-worth individuals, especially those thinking about income longevity, tax efficiency, and inheritance planning, life insurance can still be a useful tool. The key is knowing how to use it and how to make it affordable.

What’s the Purpose of Life Insurance Now?

In your 30s and 40s, life insurance is primarily about income replacement. If something happens to you, your spouse and kids are protected. But later in life, the focus shifts. At this stage, life insurance can help:

• Offset estate taxes
• Provide liquidity to heirs
• Fund charitable giving
• Create a guaranteed inheritance
• Replace lost pension or Social Security income

If any of those apply to your goals, life insurance might still be a fit.

Term vs. Permanent: Rethinking the Either/Or Approach

Many people think they have to choose between term and permanent life insurance. Term is cheaper but runs out, while permanent is more expensive but lasts forever. So they pick one and often overpay.

There’s a smarter way to handle it: layering.

How Layering Life Insurance Works

Layering is simply the strategy of combining multiple policies with different durations and purposes. For example, you might:

• Buy a 10-year term policy to cover short-term needs like a mortgage or business obligation
• Add a 20-year term for longer obligations like college or spousal income
• Keep a smaller permanent policy in place for final expenses, estate taxes, or legacy goals

By layering policies, you avoid overpaying for permanent insurance you don’t need now, or underinsuring yourself later.

Why This Makes Financial Sense

Layering lets you align your insurance with your actual timeline of financial risks. You’re not locking in a huge premium on a single policy. You’re creating targeted coverage at a lower total cost.

You can also reduce or drop coverage as your needs change. That flexibility helps you stay efficient while still protecting what matters most.

Cash Value Isn’t the Whole Story

Many permanent policies come with cash value features. While those can be useful in some plans, they’re not the reason to keep insurance in place. The bigger picture is what the death benefit can do, especially for taxes, charitable giving, or income replacement for a surviving spouse.

It’s important to evaluate insurance on what it protects or enables, not just what it accumulates.

How to Use Life Insurance in Estate Planning

If your estate is expected to trigger federal or state estate taxes, life insurance can be used to pay the bill without forcing heirs to liquidate assets. You can also set it up in an irrevocable life insurance trust (ILIT) so the proceeds stay outside your estate.

Even if estate taxes aren’t an issue, life insurance can ensure equal inheritance when passing on assets like property or a business.

What About Retirees?

Retirees sometimes assume they don’t need life insurance at all. But consider a few scenarios:

• You want to guarantee an inheritance for kids or grandkids
• You’re concerned about the financial impact on your spouse if pension income disappears
• You want to replace the charitable donations you’ve made during your lifetime

In each case, life insurance can play a supporting role, even in retirement.

Build a Plan That Evolves with You

Life insurance isn’t one-size-fits-all. And it doesn’t need to stay the same for 30 years. By layering policies and tying them to your evolving financial goals, you create more control, more flexibility, and often a lower cost than trying to cover everything with a single solution.

If you’d like to revisit your insurance strategy and see how it fits into your broader wealth plan, reach out to WE Alliance Wealth Advisors. Let’s build something that works for the life you’re living now and the legacy you want to leave behind.