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Jul 13, 2021·10min

Who Needs Permanent Life Insurance? The Answer Might Surprise You

So, who needs permanent life insurance? Well, as with everything else—it depends. Some of the variables include your age and life stage, as well as your current income and future financial goals. If you’re here, you’ve likely already thought through at least some of these things (you’re already ahead of the game!), so let’s look at what permanent life insurance is, how it works, and find out whether or not you’re someone who needs permanent life insurance.

We’re willing to take a guess that you might be, so...

What are the benefits?

If you think that permanent life insurance only matters for when you pass away, then you wouldn’t be alone. Perhaps one of the most common misconceptions about life insurance is that young, healthy people don’t need it. But there’s a reason that 40% of people wished they’d purchased life insurance when they were younger. First of all, the earlier you invest in it, the cheaper it is. Second, permanent life insurance has immediate benefits that you can take advantage of today.

This is about more than just protecting your loved ones when you pass—it's an investment for your future. Whether you’re looking for tax-advantaged growth, lifetime coverage, cash value, flexibility, accelerated benefits, or retirement income, permanent life insurance can help you with all of these. Someone who needs permanent life insurance is someone who is looking to take advantage of what these policies offer you—both today and in the future.

Tax-advantaged growth

Do you hate paying taxes (um, yes) but love getting tax return money back (yup, big time)? Then you may be someone who needs permanent life insurance. This TL;DR version of the tax benefits for a permanent life insurance policy is this: Your policy won’t be taxed while it’s growing, which means the interest you make on your cash value is applied to a higher amount because taxes aren’t cutting into it every year.

When you invest in permanent life insurance, you have the chance to grow wealth and access the returns tax-free. So if you’re thinking about your financial future (which, if you’re reading this, you are), then that’s a huge bonus. We’re talking 0 taxes on interest, dividends, or capital gains on the cash-value aspect of your policy if you decide to withdraw. If it helps, you can think of your permanent life insurance policy as a retirement account like a Roth IRA or Roth 401k—only, you get a death benefit as well.

Lifetime coverage

Often, those trying to discern who needs permanent life insurance are people who have others that depend on them financially. If you’re looking out for loved ones, permanent life insurance offers a super secure option. While term life insurance promises payment of a specified death benefit for a specific period of years, permanent life insurance is...well... permanent. That means you don’t lose your coverage after a set number of years.

Not only does your coverage last your entire life, but your premiums stay the same as well. While permanent life insurance premiums may start out higher than term, they won’t increase for the rest of your life. You get to lock in the price at your current age and health, and that’s that. You won’t have to renew ever again.

Cash value flexibility

A primary benefit of permanent life insurance that we’ve already hinted at is its cash value asset. While permanent life insurance may seem more “expensive” on the surface, a majority of each payment you make into your permanent life insurance policy actually goes toward a savings vehicle called “cash value.” This money then accrues over time and can be accessed tax-free (see above) whenever you want it. That means that even if you chose to withdraw all of the cash your plan had accumulated, your death benefit remains the same.

No one can anticipate every major financial need that will come up, so having this type of flexibility is huge. Let’s say you need money for a home or your child’s college, you can take the cash value out of your permanent life insurance while still leaving the policy benefits intact. You can withdraw your cash value early, i.e. after 10 years of starting the policy, which could be way before your typical 401k which you can’t access until you’re 59 ½ unless you’re looking to pay a boatload of penalties and taxes. You have the option to withdraw money when you need it, use it, and even pay it back to have it keep growing. It’s entirely flexible and up to you!

Accelerated benefits

One of the difficult aspects of figuring out if you’re someone who needs permanent life insurance is understanding your current (and future) health risks. While your current age and health will affect your policy premium, no one can know what lies around the corner. This is where accelerated benefits come into play.

If you happen to develop certain health conditions at some point down the road (things like heart attack, stroke, invasive cancer, or end-stage renal failure), it’s possible that you could receive anywhere between 25 percent and 100 percent of the policy before you die. In short: You don’t have to leave your loved ones with a big medical bill after a health scare drains your savings. You also don’t have to worry about paying your bills and living expenses if you’re too sick to make it to work for an extended period of time. That’s exactly how your permanent life insurance can work for you— right away and right when you need it.

Retirement income

If you’re already looking forward to retirement, you may be someone who needs permanent life insurance. Remember the cash value flexibility that we mentioned above and how it helps you grow money like a savings account? You have the option to also use that money to plan for your retirement, giving you extra security as you grow older. Essentially, building the cash value can serve as a way of buttressing investment portfolios and some even say that the stable growth of cash in a permanent life insurance policy could open up the door for high-risk, high-return investing strategies elsewhere, while still leaving money for your loved ones through the death benefit.

Of course, how you choose to save, invest, spend, and give your money is up to you, but having the flexibility to think long-term with your cash is something a permanent life insurance plan offers.

So, who needs permanent life insurance?

As we’ve already said, permanent life insurance can be great for anyone looking to use their permanent life insurance as a good investment. But when it comes to specific stages of life, there are some people that can experience the full benefits.

Couples and parents

If someone is financially dependent on you, then the conversation around who needs permanent life insurance is one worth having. No one wants to think about what might happen when someone passes away, but you’d rather be having the conversation with your loved ones today than to leave them figuring it out alone. And if you’re married with kids, then there are even more variables to consider.

For example, permanent life insurance can help with college planning. If you’re planning to help support your children through college, at least in part, then you’re going to need to have a plan. While a 529 education plan is a legitimate option, it also comes with a fair amount of restrictions. On the other hand, you can view the cash value of your permanent life insurance plan as a tax-free loan from yourself at a 0% loan interest rate. There are plenty of creative ways for how to use your cash accumulation, and parents with kids can take advantage of many of these as they raise their families.

1099ers and business owners

Life is good when you’re your own boss. Permanent life insurance can make it even better. If you’re thinking about starting your own business, or if you already have, you may be someone who needs permanent life insurance. The reality is that being self-employed comes with decreased job security, and a life insurance policy can act as an important safety net. You’re already used to weathering the risks that come with running your own shop, so permanent life insurance can act as the one safe route you insist on taking.

In addition to all the benefits listed above, permanent life insurance plans can benefit businesses looking to grow. Not only can having this type of policy in place attract talent and help employees protect their families, but it can also be something useful in a business owned by two or more people to plan for what to do in the event of an owner’s death. And of course, there is the cash value flexibility that can help in uncertain times if you need immediate cash to pay overhead expenses. No more waiting on a 401k. You can get your money when you need it.

Anyone who wants to retire young (or well)

While some are still waiting for that one viral video to make us millions of dollars (the lottery might actually be a better bet), there are other ways to plan for retirement like a real adult. The secret to making a lot of money in order to retire early is going to blow your mind. Ready? Long, safe, boring investments.

We know—incredibly exciting stuff. Look, if investing in cryptocurrencies is your retirement plan, then good for you. But if you’re looking for something a little more safe and secure, then you may be someone who needs permanent life insurance. The good news is that if you’ve read this far, then you’re already willing to plan for the future. Permanent life insurance isn’t just a plan for after you die—it’s an investment that can work for you while you’re still alive.

Unlike what you may think about when you hear the term “life insurance”—where the money only comes back your way after you die—permanent life insurance is a way to accrue wealth and use it while you’re still alive. It can be an investment account or a high-interest savings account that you can access later in life. We’re talking about cash that can grow tax-free. If that’s not a great investment, then what is?

Are you someone who needs permanent life insurance?

If you’re looking for a TL;DR summary and a quick answer to your question, then you’ve come to the right place. The short answer for those asking who needs permanent life insurance is that these policies can be highly effective means for caring for your loved ones, saving for retirement, and managing your money, all in a tax-optimized way.

Whether you’re single or married, with college-aged kids, or nearing retirement, the benefits of a permanent life insurance plan are plenty. The only real question is how are you going to use it.

  • Are you trying to find a safe way to take care of your family when you’re gone?

  • Do you want a safe and secure way to save money for retirement?

  • Are you looking for a vehicle that will allow you to access cash when you need it?

  • Do you want the option to receive your benefits before you pass away in light of certain medical emergencies that may arise?

  • Are you searching for something that can help you be financially responsible, both today and for the rest of your life?

If the answer to any of these questions is yes, then you are someone who needs permanent life insurance. Search for a plan with Amplify, and you can shop over 70 A-rated life insurance companies to help you protect what matters most to you at the best rate. We can help you figure out who sells permanent life insurance, who carries whole term permanent life insurance, and who takes investment and longevity risk in permanent life insurance plans.

All of these questions have answers. Get a quote today to find out which plan best fits you and if you’re someone who needs permanent life insurance. We’re here to give you the options that make it easier for you to decide what your best financial future can look like. Will permanent life insurance be a part of that future? Let’s find out together.

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