A case where it obviously makes sense is something like a covenant between two companies; whose life would be relevant there, if both parties want the contract to last a long time and have to pick one? The CEOs? Employees? Shareholders? You could easily have a situation where the company gets sold and they all leave, but the contract should still be relevant, and now it depends on the lives of people who are totally unconnected to the parties. Just makes things difficult. Using a monarch and his currently living descendants is easy.
I'm not sure how relevant it is in a more employer employee context. But it's a formalism to create a very long contract that's easy to track, not a secret trick to create a longer contract than you're normally allowed to. An employer asking an employee to agree to it would have no qualms asking instead for it to last the employee's life, and if the employee's willing to sign one then the other doesn't seem that much more exploitative.