Whom the death tax benefits: The largest life insurance policy ever sold

Life insurance benefits can be tax-free. Inheritances over $5.3 million are taxed — with rates going up to 40 percent.

That’s why the life insurers lobby like crazy to save the estate tax. (I’ve written about this lobbying effort in Reason, in the Washington Examiner and for the American Family Business Foundation.)

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Recently, some unnamed California billionaire bought the largest life-insurance policy ever. Buying life insurance doesn’t make that much sense if you’re already a billionaire — unless it’s part of planning around the estate tax.

Here’s the story from personal finance site Saving Advice.

“The question which immediately comes to mind is, “Why would someone with a billion dollars need a life insurance policy at all, let alone one for $201 million?” It’s a good question, especially since insurance is usually purchased by those who wouldn’t have the money to pay for something if a disaster would happen. A person who is rich enough to find himself on the world’s richest people list would certainly not fall into that category. …”

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