Every rich person I know has life insurance. Every broke person I know has a reason why they don’t.
Here's something I've noticed: the loudest voices arguing against life insurance after financial independence almost always come from people who aren't financially independent yet and don't have kids. They're still grinding toward FIRE, optimizing every dollar, cutting costs to close the gap. Makes sense for them. But once you actually get there, the calculus changes.
Every single person I know in real life who is FIRE, or is rich with a net worth over $10 million, has life insurance. Not just life insurance either. They have comprehensive car insurance, property insurance, personal property insurance, and an umbrella policy. The wealthier people get, the more they insure despite being able to self insure. That's not a coincidence.
For context: my wife and I have matching 20-year term policies we got through Policygenius that we plan to hold for the full term. Policygenius lets you shop for customized, affordable life insurance in one place. We achieved FIRE in 2012 and 2015, respectively, and later had children in 2017 and 2019. Getting an affordable life insurance policy reduced our stress immensely, especially given we are FIRE with no steady paychecks.
Your Mindset Shifts From Accumulation To Preservation
Once you reach financial independence, something fundamental changes. You stop chasing more and start protecting what you have. FIRE, by definition, means you've traded maximum earning potential for maximum freedom. If you still wanted more money, you'd keep grinding. But you don't, so you negotiated a severance, and kissed the corporate world goodbye.
In FIRE mode, you optimize for peace of mind and stability. An extra $100,000 or maybe even $1 million doesn't move the needle on your lifestyle because you're already free. Suddenly, earning a risk-free 4.5% on your cash looks pretty attractive when your safe withdrawal rate is 3.5%. You buy more Treasury bonds, less stock, and sleep better.
You also stop sweating small conveniences. You pay a little more for the closer gas station. You get food delivery. You pay for help around the house, tutoring for the kids, and a revocable living trust. The older and wealthier you get, the more you're willing to pay for stability and peace of mind.
Life insurance is exactly that kind of purchase.
A Premature Death Is The Most Destabilizing Event Imaginable
The opposite of stability and financial peace is watching your family scramble after you die, especially with young children. And death can come in an instant.
If you're the primary or sole financial provider, dying without life insurance leaves a quiet, devastating uncertainty for your survivors. The last thing you want is your grieving spouse selling assets at the worst possible moment because panic set in.
Think about dying during the 2008 financial crisis, or during the COVID crash in March 2020. Your family is already overwhelmed with grief. Then they watch the portfolio drop 30% – 50%, and the fear compounds: “I already lost him. I'd better sell before I lose everything too.”
Nobody thinks clearly in that state. The Pacific Palisades fires in early 2025 reminded us all that catastrophic loss can stack on top of catastrophic loss without warning.
If your estate is under the estate tax threshold, life insurance provides a tax-free financial buffer so the surviving family can keep living normally without touching a single investment. The bigger the policy, the longer they can breathe before making any decisions.
Don't Touch The Finances For At Least A Year After Death
Just like how you should sit on a financial windfall for a few months before doing anything with it, surviving family members shouldn't make major financial decisions for at least a year after a loss. The worst of the grief will have softened enough by then for rational thinking to return. But sadly, the pain will never fully go away.
With that in mind, a good baseline for your life insurance amount is at least one year of living expenses if you are FIRE. I'd recommend two years, since settling an estate and managing a trust can easily drag past the 12-month mark. In one example, my family has had to deal with an unscrupulous estate planning lawyer for over four years to get answers to my aunt's estate.
My wife and I have matching 20-year policies that cover about 2.8 years of our normal living expenses. We chose that number deliberately. Between any market correction and rebound, and the time needed to actually access and execute our trust documents, 2.8 years felt like the right cushion to come out the other side financially intact.
Life Insurance Calculator For Those Who Are FIRE
Here’s a handy FIRE-with-kids life insurance calculator I vibe-coded to help estimate how much coverage you may need. Generally, the older you and your children get, the less life insurance you’ll need as your net worth grows and your children become more financially independent.
Your situation
Recommended coverage
Coverage by life stage
Estimates based on Financial Samurai's framework. Each household is different. Use these as a starting point, not a final answer. Consider getting free customized quotes at Policygenius.
The Cost Is Almost Irrelevant At This Point
Here's what's interesting about life insurance after FIRE: it's cheap relative to your wealth, so you might as well get it. But again, most people who are not FIRE do not think this way due to the desire to optimize expenses.
My policy costs $140/month. That covers 2.8 years of living expenses. If I'd been smart and locked in a 30-year policy at age 30, it would have cost only $40/month. Instead, I spent two years paying $760 to $880 a month on an old policy I thought ended. My old insurance provider was automatically debiting my checking account each month without me noticing.
Ouch, and what a dummy I was. That's probably my second biggest financial mistake ever, and I've made some good ones.
But here's the point: even at the inflated price, life insurance didn't hurt. When you're financially independent, the premiums are a rounding error in your budget. And the relief that came when we locked in our Policygenius policies in 2022 was immediate and real.
Knowing my wife and kids wouldn't have to sell a single asset for nearly three years if I died tomorrow is worth at least $1,000 a month in peace of mind to me. That's $860 a month in value I'm essentially getting for free since I'm only paying $140. I'm not sure paying $1,000 a month for a therapist could provide this type of mental relief.
Back in 2020–2023, we were reminded of death every day through nonstop COVID news. And as we get older, we’ll inevitably notice more people around our age passing away unexpectedly.
Lock Down A Life Insurance Policy
Life insurance after FIRE isn't a contradiction. It's the move every wealthy, financially savvy person I know has made. It's not so much about needing the money. It's about buying your family time, stability, and the space to grieve without financial panic layered on top.
That's not a cost. That's an act of love.
If your passive income and wealth eventually grow large enough, and your kids are grown and financially independent, feel free to cancel. But until then, treasure the security it provides. The premiums are cheap. The peace of mind is not.
Readers, are you financially independent but still holding a life insurance policy? Do you think people still on the path to FIRE are so laser-focused on cutting costs that they miss the intangible benefits? How are you protecting your family from a premature death?
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I am one of those who have reach fire status and do not buy life insurance. To me, I am no longer the provider of the family, rather it is the assets that provide income. So I am not sure why I would need it? If I die, my family or trustee can just keep things as is. Maybe I’ll draft a one page instruction on what to do, but nothing exotic is needed to be done.
Sounds good to me John. The most important decider is you and what you, your spouse, and your young children are comfortable with. If you can share some net worth or passive income details as well as your age and your spouse’s, that would be helpful. Because Bill Gates can definitely self insure no problem!
Great article on the reasoning for life insurance when one has a substantial net worth. My wife and I decided to get term life insurance until our kids are 27. We have the net worth to continue if one of us passes early but did it for the peace of mind of not having to touch our current funds until a later date.
Age 27 is smart. And I have a feeling that when my son is 24 and our 20 year term policy runs out, I will have wish to have gotten a longer term.
So I’m actually going to look for another 20 year policy this week and probably lock it down.
My favourite sentence: “The opposite of stability and financial peace is watching your family scramble after you die, especially with young children. And death can come in an instant.”
From where do you watch your family scramble when you’re dead?!?!
In your mind, the moment before you are about to pass.
I always had some life insurance through the company I worked for (a Bell Labs related company) but when I was 37 (more than 30 years ago!) I bought a $1M 20-year level term life policy for me and my wife that probably cost about $50/month each. That relatively cheap price bought me priceless peace of mind as if needed it would help my wife with paying for our two daughters’ private school (Punahou!) and paying the mortgage.
When those policies expired (and even though my two daughters were just out of college) I renewed for 10-year level term life policies for my wife and I that cost about $150/month each. My reasoning was that my kids as adults might still need help someday (perhaps to buy a house) and if I was no longer around to help at least there’d be insurance money to help with those things. And it would also help my wife pay off the mortgage and help her financially as she would no longer have me steering our financial ship.
Anyway, last year those policies expired so I decided to renew (for perhaps the last time?) my $1M 10-year term life policy, (even thought the cost was now $590/month just for me!)
That’s a lot per month but my budget can afford it and these past two years we’ve seen many of our friends unexpectedly dying from a variety of causes (diseases, heart attack, freak accidents, etc) so again that policy buys me piece of mind and it also would provide a nice inheritance for my wife and daughters.
My decision was also reinforced by the fact that my wife (who is 4 years younger than me) has developed some health problems and so her request to renew her term life policy was denied!
(I had never really thought about the possibility that one’s health could deteriorate such that insurance was no longer an option!)
Anyway, I thought you might appreciate hearing my experience with this. Keep up the good posts!
Sincerely,
Great insights! I think the main Takeaway for me is that I should probably get a 30 year policy right now before it gets too expensive.
As some have said, I think if you are keeping 3 times your living expenses per year liquid and accessible to your family after you pass, a lot of the issues stated go away regarding the need for life insurance. However, if you have younger children, I can see still having life insurance to account for all the non-financial contributions a parent was making – cooking, picking up kids, work around the house, tutoring kids with homework – that perhaps the surviving spouse isn’t able to do and might want to spend money on to make their lives easier, especially after the passing of their spouse. I think your calculator is accounting for this. Insurance to protect against lawsuits is definitely more important than ever to protect your net worth.
I agree with a life insurance policy that covers 3 years of living expenses but would also include additional coverage to cover college expenses. I have life insurance covering both 3 years of living expenses and coverage for college. I am assuming the 4-6 years of living expenses needed for having kids under 10 that you show in your calculator is accounting for this?
I agree with a life insurance policy that covers 3 years of living expenses but would also include additional coverage to cover college expenses. I have life insurance covering both 3 years of living expenses and coverage for college. I am assuming the 4-6 years of living expenses needed for having kids under 10 that you show in your calculator is accounting for this?
I agree with a life insurance policy that covers 3 years of living expenses but would also include additional coverage to cover college expenses. I have life insurance covering both 3 years of living expenses and coverage for college. I am assuming the 4-6 years of living expenses needed for having kids under 10 that you show in your calculator is accounting for this?
As some have said – I think if you are keeping 3 times your living expenses per year liquid and accessible to your family after you pass, a lot of the issues stated go away regarding the need for life insurance. However, if you have younger children, I can see still having life insurance to account for all the physical contributions a parent was making – cooking, picking up kids, work around the house, tutoring kids with homework – that perhaps the surviving spouse isn’t able to do and might want to spend money on to make their lives easier, especially after the passing of their spouse. I think your calculator is accounting for this. Insurance to protect against lawsuits is definitely more important than ever to protect your net worth.
As some have said – I think if you are keeping 3 times your living expenses per year liquid and accessible to your family after you pass, a lot of the issues stated go away regarding the need for life insurance. However, if you have younger children, I can see still having life insurance to account for all the physical contributions a parent was making – cooking, picking up kids, work around the house, tutoring kids with homework – that perhaps the surviving spouse isn’t able to do and might want to spend money on to make their lives easier, especially after the passing of their life partner. I think your calculator is accounting for this. Insurance to protect against lawsuits is definitely more important than ever to protect your net worth.
Hi Sam, nice post. I’ve never had life insurance beyond what was provided by my employers as a baseline benefit and am now retired with self-sufficient children and enough assets, income and liquidity for all foreseen needs. But I am curious about life insurance as an estate planning tool. Do you have any comments on the use of life insurance in conjunction with an Irrevocable Life Insurance Trust (ILIT) to reduce the size of one’s estate and decrease or eliminate estate taxes?
Hi Sam, when I saw the headline for this post, I thought it might be about using life insurance in conjunction with an Irrevocable Life Insurance Trust (ILIT) as an estate planning tool to reduce the size of one’s estate and decrease or eliminate estate taxes. Can you comment on that?
Hi Sam, when I saw the headline for this post, I thought it might be about using life insurance in conjunction with an Irrevocable Life Insurance Trust (ILIT) as an estate planning tool to reduce the size of one’s estate and decrease or eliminate estate taxes. Can you comment on that?
We both have life insurance, with a death benefit of about 2.8 x expenses. Some whole to age 85, some whole paid up, some term (almost at end of term) and some UL. We are FIRE (due to hubs disability), and watch the cash values grow annually at guaranteed rates (or better!) We also own life insurance on our 4 kids, to protect their loved ones in case something happened before they are financially solid AND to make sure they have some if for some reason they can’t qualify due to health. Same thing hubs parents did for us when we were young. Even though we are FIRE, going from MFJ to S filing would be expensive, so pulling out IRA money/selling shares might not be the best plan if something happens to one of us. The kids have been able to borrow against as needed for things like the last of grad school tuition or a move (with our approval, since we are the owners). One even borrowed for time to land the right job (not just any job) after a layoff, and they can pay off any loans directly through our agent. A great tool. Over the next few years, policy ownership will continue transition to the younger 3 (ages 29-36) within the gift tax allowances.
“ We also own life insurance on our 4 kids, to protect their loved ones in case something happened before they are financially solid AND to make sure they have some if for some reason they can’t qualify due to health.”
Thanks for sharing. I’m going to look into this for my two kids and the rationale why.
“ Over the next few years, policy ownership will continue transition to the younger 3 (ages 29-36) within the gift tax allowances”
Is this because you have a whole life policy?
Hybrid Life/LTC policies are worth a look, especially if you live in a state with low exemption thresholds.
I think 10 miilion is alot of money but to me its still upper middle class. Higher end since about the top 1%.
I think its networth of 50 million where you no longer have to worry about anything. At that level no insurance is needed. You can fly your family international first class without blinking an eye. With 10 million networth I’d still worry about 1st class tickets. Recently saw first class to Bangkok was 25k. Family of 4 would be 100k.
Could be. What is your net worth now and if it’s below $50 million, is that your plan?
Billionaire Charlie Munger Says He Ditched Insurance Once He Got Rich And Self-Insured Instead As ‘All Intelligent People’ Do — ‘There’s a Lot of Waste’
I think I’d self ensure as well to simplify my accounts if I was worth billions. Most people would.
But it’s important to think about us non-billionaires. And also, I’m not sure Charlie was too wise given a died with $3.5 billion.
Many people would have given the money away or spent it a little bit better.
And keep in mind that Charlie and the folks at Berkshire Hathaway make a lot of money selling insurance. He understands how it’s distributed, who makes money on the transactions, and how much of the benefit inures to the recipient. When he says “there’s a lot of waste” he has first hand knowledge.
While I don’t have the kind of wealth that Charlie had, I only availed myself of life insurance when it was provided by my company during my working years. It was income protection. In retirement I can more than adequately protect my family through my trust, planned wealth transfers, and custodial accounts.
When it comes to peace of mind the person that more often than not who receives it in a life insurance transaction is the seller.
I didn’t use to agree with needing life/ disability insurance if FIRED- but now I’m changing my mind. My kids manage to suck up a lot of money, and right now I am very lucky because everyone is healthy. The health factor can change and the expense liability shouldn’t be underestimated. Even here, with our universal health care.
Then, honestly, you’re not FIRE if you now need more than you previously saved. That’s not a life insurance issue – that’s a “I underestimated my annual spending needs – and I need a bigger nest egg” situation.
The richer one becomes the more insurance they have? I’ll bet most of them self insure long term care insurance with a net worth of $10M
Thanks for the article, Sam. Really interesting. To me, there’s something quietly powerful about the idea that even people who have “made it” still choose to protect their families. It reminds us that financial independence doesn’t erase our fragility; it simply gives us the chance to act with more intention.
What moved me most is how the article reframes protection as an act of compassion. In moments of loss, clarity disappears, and the people we care about are left navigating both grief and uncertainty. A policy doesn’t fix the pain, but it gives them time—time to breathe, to think, and to avoid rushed decisions that could reshape their future.
I believe in choosing what is steady over what is perfect, what is human over what is merely efficient. True financial integrity isn’t just about building wealth, but about creating safety, continuity, and care for the people who walk life with us.
My spouse is the higher earner and can afford our lifestyle without my income, and my kids’ 529 plans are funded, and they get my interest in a trust per stripes, and my spouse gets our marital property, so everyone will be fine, so life insurance is unnecessary at best. Also, no one ever says this, so it must be taboo, but I also don’t like the idea that someone stands to gain a large payout from my death.
Important topic. I think age plays a role in this decision as well. The policy you describe is definitely affordable and, IMO, reasonable. Others may find the cost to be unworthy of the squeeze as they get older.
For me, the balance was a 20 year term policy purchased at age 40 that provided $1M in coverage for only $50/month. Seemed like a no brainer. Today, as I near the expiration of that policy, I don’t see a new life insurance policy being high on my list of priorities. If I wasn’t already fairly maxed out, I’d redirect my life insurance premiums towards a higher umbrella policy, which I think is a MUCH more valuable tool for people in the FIRE community.
Protecting what you have from a potential plaintiff has become a much greater concern than adding to overall net worth in the unfortunate event of an early death to a spouse (NOTE: if the household income would drop significantly with the death of one spouse, e.g., pension benefit with no survivor rights, then I’d feel much differently).
In law school, my torts professor once asked the class “do you know how rich people stay rich?” Answer “they buy insurance.”
Smart. Did the professor elaborate why?
Given the subject of the class, protection from plaintiffs would be the likely answer….
Protecting yourself from liability is quite different than insuring your inevitable death. I would absolutely agree that wealthy people will take the steps necessary to protect their wealth. It’s no different than taking steps to minimize your tax liability. But that’s a fundamentally different exercise than buying life insurance.
I feel fortunate to have gotten a term policy when I did. I’m still covered for 15 more years. And by then my kids will be out of the house and able to take care of themselves. I sleep easier at night knowing I have a policy and am glad I didn’t have to worry about a complex medical exam either.
If simone got low cost level term life-insurance policy – likely that, towards later half of the term – its likelyhood of payout increases (compared to first half – i am only talking from statistical point of view). It may be more bang for buck to keep the policy – even after FIRE due to odds of payout favor you.
Also, among FIRE community and/or other financial forums which strongly advocate for delaying Social Security and/or recommend Roth-conversions: they promptly fail to answer,
what if, if the insured dies prior to SS-delayed age., or that the Roth-conversion(s) prove to be sub-optimal because those did not get sufficiently long runway/time for those to turn optimal!? Also, spousal/widow tax trap
Thus, we feel – keep at least limited amount of low cost level term policy – to take care of such pre-mature death possibility. The policy amount doesn’t need to be big number (hence low premia) – and try to maintain such term policy into early/mid 70s — if you could.