"life rights" agreement is really a way to block three types of lawsuits from happening: violations of privacy, publicity or defamation. (These agreements may also involve "cooperation" arrangements requiring a living person to cooperate with the filmmakers.) A deceased person has no privacy rights and cannot be defamed. In some states the right of publicity survives death, but documentaries and biopics typically don't trigger these rights -- unlike the sale of merchandise or endorsement of products, for example. Of course, there may still be a need for permissions for copyrighted materials such as photos, music rights --for example in the case of a biopic about a musician, or rights based on a published work such as a biography.
When do you need them? Life rights agreements are most often needed if liberties will be taken with the facts about a living person, or if the person is not a public figure. Public figures cannot stop a life story documentary or biopic in the U.S. if there are no violations of privacy or defamation ... although they can always threaten lawsuits. Check out our previous entry on life rights. (BTW, this site explains the life rights rules.)