Let me try and show a simple example to a complex sitaution/strategy....
Man age 60 and retired (married with one adult child)has $1,000,000 in IRA plus $1,000,000 in other assets. Estate taxes may or may not be an issue. Fact is, this $1,000,000 WILL be income taxable, to whomever, when withdrawn.
Option: Man buys $1,000,000 of permanent life insurance and names the wife as beneficiary. The $1MM IRA bene is changed to his child (age 30). The other $1MM in assets can go into his wifes name or a credit trust...whatever is applicable, but not relevant for this.
The benefit is that if the man dies first, his wife gets $1MM estate AND income tax free and no RMD for the wife to deal with! The child gets the $1MM and can take RMD based on his/her MUCH YOUNGER age.
Result....more money kept in the family, less to the government, and less headaches to the wife!
Now, this is ONLY GOOD, IF, thats what the man (family) want to accomplish, he is insurable at standard rates or better, has the extra cash flow to pay the premiums!
In this case, since the man WANTS the above, life insurance is a wonder financial tool for estate planning...he is taking advantage of leveraged dollars!