A generation ago, clients had no residual value from theirretirement plans. Life insurance was needed to provide afinancial legacy. Today, the largest asset in many people’s estatesis the value of their retirement savings.

That’s greater, in most cases than the value of theirhome. Is there a need for life insurance?

Today, people live longer. Is the value of life insurancestill there? Many sell the house in which they raised their familyand downsize, or move to an assisted living facility. Mostdon’t have any federal estate tax liability (at least under currentlaw). The state estate taxes, if any, are at rates lower thancapital gains. So, who needs life insurance?

Protection: Just starting out

Certainly, life insurance on my life is needed to replace myincome, provided there is someone left who relied on that incomefor their financial support. I should have life insurance tocover my debts.

Life insurance death benefits can also help pay the expenses toeducate my children/grandchildren. Not only is the deathbenefit worth having, but the cash value operates like a 529savings plan (or Roth account): Contributed after-tax dollarsaccumulate tax-deferred and are distributed tax free. But cashvalue life insurance policies have fewer restrictions than 529plans.

Accumulation: Pre-retirement

Once I accumulate funds (qualified and non-qualified), my needfor life insurance lessens. However, consider re-thinking theuse of life insurance and the selection of who should beinsured. Which will occur first; your retirement or yourparents’ (or grandparents’) death?

Yes, it’s a morbid conversation, but look at the internal rateof return (IRR) on premiums to death benefit. What return areyou getting on your current retirement savings?

Read: LIMRA’s 2015 life insurance forecast

Make sure to adjust for income taxes during retirement for thenon-qualified investments and after retirement for the qualifiedinvestments. I can reasonably guaranty that yourparent/grandparent may not have died before your retirement, butwill certainly die during your retirement. So, don’t stopfunding retirement. Just take a piece of that budget and lookat buying life insurance on people older than you.

Distribution: retirement

At the death of the first spouse, life insurance death benefitcan be used to replace income for a surviving spouse. Thisallows the couple to spend more.

The problem, of course, is not knowing how much more can bespent since we don’t know when each spouse will die. So,financial advisors run lots of projections with lots ofassumptions. What those analyses produce is the optimalrecipe for retirement security:

• work longer,

• die sooner,

• save more pre-retirement, by lowering your current standard ofliving, and

• spend less during retirement, by reducing your expected standardof living during retirement.

The result is large retirement savings left to your heirs. You project that your heirs will “stretch” the distributions andtake only required minimum distributions. But, when your kidswere younger and you filled the cookie jar, did they want just onecookie?

Consider using life insurance death benefit to pay theincome taxes on a Roth conversion at death. Thatway, if they take out more cookies, they will not incur incometaxes on the distributions. Who can convert to a Roth? There are no income limits (under current law).

• The participant can convert to a Roth. So, if you have anywarning of your death, you can exercise the conversion, even onyour death bed.

• The surviving spouse of the participant can convert. So,even if you had no warning of your death, but you are survived by aspouse, the spouse can convert and use your life insurance proceedsto fund the income taxes.

A non-spouse beneficiary (inherited IRA) cannot convert to aRoth. But, the life insurance would be there to fund theincome taxes as heirs remove cookies from the cookie jar.

So, why don’t we sell asmuch life insurance as we should?

A generation ago, life insurance agents were seduced by assetsunder management. As investment returns plummeted in theaftermath of 9/11, these investment advisors were seduced by thelifetime benefit riders on variable annuities.

To the best of my knowledge, no one has ever been rated ordeclined for an investment or annuity. Chasing down investmentstatements is a lot easier than chasing down attending physicianstatements.

If I can make the income I want from selling an easier productto sell, why sell life insurance? Are there people in youroffice whose compensation is directly tied to increasing assetsunder management and/or selling annuities? If so, then theyare selling against you. Your greatest competition may verywell be coming from inside your own office.

The second reason why we don’t sell as much life insurance as weshould is that we continue to confuse our clients. Which lifeinsurance product is right for you?

• Should it be term or permanent?

• If permanent, should it be whole life or universal life?

• If universal life, should the engine be fixed, indexed, orvariable?

• If fixed, should it have current assumptions or guarantees?

If a client came to you today with $1,000,000 to invest, wouldyou be selecting just one investment?

• Should it be stocks or bonds?

• If stocks, should they be

• domestic or international?

• growth or value?

• large, mid, or small cap?

Of course the answer is asset allocation; a diversifiedportfolio.

That should be the same answer for life insurance. Acombination of:

• term

• whole life

• universal life,

• fixed

• indexed

• variable

The third reason is that we have become myopic and only look atthe person in front of us as the potential insured. Why notinsure a client's parents and grandparents?

So, finally, how much life insurance does anyone need? Thatshould not be the question. I have clients tell me that theydon’t “need” long-term care insurance. There a ways toprotect family assets and they have sufficient income and assets toprovide the custodial care.

I ask them if they have considered cancelling their fireinsurance. They may have sufficient income and assets toreplace the house. So, why do they have fire insurance, ifthey don’t have a mortgage? It is not about “need.” It isabout understanding the value of life insurance.

Wouldn’t you rather have your client’s beneficiaries say to you,“Thank you for helping our family. You took care ofthe people he loved. Had it not been for youproviding for us …Thank you for pushing him to do the rightthing.” Instead of, “Why didn’t you bring up lifeinsurance?”