Understanding Life Insurance as a BigLaw Attorney

You probably have a vague understanding that you have life insurance coverage as part of your benefits at work. It’s probably all you care to know, because otherwise, life insurance often gets a bad rap among attorneys, due to the relentless sales tactics of insurance agents and the complex, often-misunderstood policies that are pitched as “must-haves” for high-income professionals. The aggressive phone calls and emails from brokers pushing whole life policies may lead you to tune out the entire conversation. However, life insurance can be an essential part of a financial plan, particularly for attorneys with dependents, significant debt (but don’t think of federal student loans here), or homeownership.

Whole Life vs. Term Life Insurance: What’s the Difference?

First, let’s discuss the difference between the scam, whole life insurance sold to people who don’t need it, and the real deal, term life insurance:

Whole Life Insurance – This is a permanent insurance product that lasts for the insured’s lifetime (as long as premiums are paid) and accumulates cash value over time. Cash Value can be thought of as a low-risk investment account that you can borrow against, tax-free. In turn, whole life insurance is often marketed to high-income professionals as a tax-efficient investment strategy.

However, here are some things that often go unmentioned: the money you deposit into the policy often is diverted to commissions and fees, especially in the first decade or so; the money you borrow often does not continue to earn the crediting rate; if you do not pay back the money you borrow prior to your death, the benefit for your loved ones is reduced in-kind; “dividends” are actually a return of excess premiums (policy holders paying more than was necessary); the internal fees for the investments and the policy itself are often higher than a person may fully realize.

When being approached by a salesperson regarding whole life insurance, ask yourself:

For what purpose would I need life insurance at 100 years old?

Do I have children with life-long, special needs?

Do I own illiquid, hard-to-distribute-and-divide assets, like a business or real estate holdings?

Do I believe that the insurance company is a charity that could remain in business for over 100 years if they were offering a product as consumer-friendly as what the salesperson is describing?

If the product is so great, why do the sales commissions need to be so high?

If an insurance company has paid “dividends” for 100+ years, how has the stock market done over that corresponding time period, and which would I prefer to have participated in?

The reality is that whole life policies are costly, complex, and frequently mis-sold. The commissions are high, the internal costs are opaque, and most buyers can achieve superior financial outcomes with other investment strategies. Whole life insurance is not in-and-of-itself evil. But the sales tactics may be. Instead, you should hope to hear about whole life policies in the context of estate planning, for example.
Term Life Insurance – This is a straightforward policy that covers a set period (e.g., 10, 20, or 30 years). It is significantly cheaper than whole life insurance and serves a clear purpose: providing financial protection for your dependents if you pass away prematurely. Since most people only need life insurance during their peak earning and responsibility years, term life insurance often makes the most financial sense.

That’s it. The Term Life Insurance paragraph is this short precisely because it’s a simple product to understand. You die within the time frame (term), your loved ones get the payout.

For BigLaw attorneys, the key takeaway is this: If you are considering life insurance, start with term life and be highly skeptical of whole life insurance unless you have a clear, specific reason for needing permanent coverage. From now on, any time I reference “life insurance”, you should assume I’m talking about Term Life Insurance. The rest of this blog focuses on Term Life.

Do You Need Additional Life Insurance Beyond Your Firm’s Benefits?

Most BigLaw firms offer life insurance as part of their employee benefits package, but the coverage is often limited. A typical policy might provide coverage equal to 1-2x your annual salary, which is unlikely to be sufficient if you have dependents, a mortgage, or other financial obligations. Here are a few considerations:

• If you have a family – Your “insurable interest” increases when you have a spouse or children who rely on your income. You’ll likely need a death benefit large enough to replace your income for years to come. You may even consider replacing some or all of your spouse’s income as well. If you were to die, would you want work to become optional for your survivor?

• If you have a mortgage – A mortgage is a long-term financial commitment. If something were to happen to you, would your family be able to continue making payments without your income? Replacing your own salary may be enough, or maybe you want to allow your loved one to pay off this debt in the event of your early demise.

• If you have student loans – As of the time of this writing (3/17/2025), federal student loans are discharged upon death, but private loans may not be. Some private lenders require a co-signer, meaning your spouse or parents could be left with the debt. Life insurance can ensure that these obligations are covered.

Because employer-provided life insurance is often limited and sometimes non-portable (meaning you lose it if you leave the firm), it’s worth considering supplemental individual coverage.

Planning Ahead: Why You Should Consider Buying Coverage Now

One of the most overlooked aspects of life insurance planning is timing. Life insurance premiums are based on age and health. The younger and healthier you are, the lower your premiums. You can purchase a “level premium” policy in which the premiums are locked in for the life of the policy. If you anticipate a greater need for coverage in the near future (e.g., marriage, children, buying a home), you may want to apply for coverage now while you qualify for the best rates.

If you’re relatively young, healthy, and only on your way to expanding your family, you might also consider applying for the base amount of a larger policy than you currently need, as this can lock in a lower rate for future insurable needs.

For example, if you calculate that you need $5,000,000 in coverage once you have 2 kids and a house, you might consider adding something like $2,000,000 in coverage now to supplement your policy at work, knowing that you can purchase the rest of the need once the kids and home are in place. Worst case, you have more coverage than you necessarily need at this stage, but not an unreasonable amount relative to your income. Best case, you have this in place prior to some health diagnosis or event that makes the cost of insurance expensive, or even unattainable in the future.

Special Considerations for BigLaw Partners

For equity partners, life insurance planning can become more complex. Some firms require participation in a whole life insurance plan as part of the firm’s structure. If this applies to you, it’s worth understanding how this policy integrates with your broader financial picture. Additionally, partners may need life insurance to satisfy lending requirements for firm capital contributions. Your overall life insurance coverage amounts and limits may change and so you need to be aware of what they are. Finally, just be aware that Equity Partners are often paying for the full cost of coverage out-of-pocket as owners of the firm.

Bottom Line

Life insurance is a financial tool—not an investment strategy. For most BigLaw attorneys, term life insurance is the simplest, most cost-effective way to ensure financial security for their families. Whole life policies are often unnecessary and expensive. If you have dependents, a mortgage, or outstanding debts, it’s worth assessing whether your firm-provided coverage is enough or if you should secure additional individual coverage.

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