<prompt> Human: I got in an argument with my friend who has worked for an insurance company about whether very rich people should buy life insurance. Im talking about extremely wealthy people whose families would not be significantly affected in a financial sense of course if they died. My argument is that such people should not buy life insurance. Buying a life insurance policy is a decision whose expected value is lower than that of just hanging onto your money. The reason that people buy it is that their premature death would be a disaster for their family, and buying a life insurance policy is a way of transferring that risk to the insurance company. For people who arent loaded, this is a fair transaction; the insurance company makes money because the expected value is in their favor and they insure a large number of people, and the people buying the policy are essentially paying for protection from disaster. To me though, life insurance becomes a ripoff if youre rich enough that your death doesnt significantly affect your family, because now youre paying for protection against a risk that doesnt really exist. Is this argument sound? Im an engineering graduate student with limited financial knowledge, so I could well be wrong, but it seems pretty clear to me that its a bad decision to buy life insurance or any insurance really if even the worst case scenario doesnt significantly affect you.  <response>: I think you and your friend are talking past each other. I assume youre thinking of term life insurance, which should not be necessary for a wealthy person, presuming theyve saved properly and the surviving spousechildren dont have excessive expenses. Your friend is probably referring to whole life insurance which is a reasonable estate planning tool for people in the 1 who have exhausted their tax advantaged savings options and are looking for ways to pass money to their dependents beyond the amount covered by the estate tax exemption currently 5.25MM per person. 