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Aug 11, 2021·6min

Why is life insurance so important?

Everyone has a list of excuses for why they think they don’t need life insurance. Trust us, we’ve heard them all.

I’m young, I’m healthy, I have a great job, I’m single, I don’t have kids. I’m making smart investments, I’m going to live forever!

While we also wish you were going to live forever, the truth is that life insurance is so important for anyone and everyone. First, let’s start by answering the question- why now?

Why now?

The best time to buy life insurance is, well...yesterday. The younger you are, the cheaper your life insurance is. Often, people will get term insurance in their 20’s or 30’s and switch to permanent in their 40’s and 50’s. But the longer you wait to get either term or permanent life insurance, the more expensive it gets. Plus, if you wait too long, there’s a greater chance that you might not qualify due to health concerns. If you want to get the most out of your life insurance for the least amount of money, buy now.

What are the risks of not having life insurance?

You leave your family and loved ones unprotected Whether you choose term or permanent life insurance, these policies help pay for final expenses after death, including funeral costs, medical bills, estate settlements, or other unpaid debts. Without life insurance, all these expenses have to be dealt with one at a time, draining whatever may have been in a savings account. By having life insurance you relieve your family of the burden of having to deal with all of these issues on their own.

You miss out on financial security and peace of mind One of the greatest intangible benefits that explains why life insurance is so important is the peace of mind that comes with knowing your family is covered in the event of a tragedy. Plus, not only do you get to go to bed at night knowing your loved ones are protected, but you’re also making a savvy investment while you’re still alive (especially if you invest in permanent life insurance). Who doesn’t want financial security? More on this in a bit.

You are literally losing money Imagine withdrawing your monthly paycheck and throwing a handful of bills in the trash on your way out of the bank. That’s what you’re doing if you don’t have life insurance...ok, maybe that’s a bit dramatic, but you really are missing out on an incredible investment opportunity. The reason why life insurance is so important is that it not only protects your family when you’re gone, but it helps all of you while you’re alive. Whether you’re using life insurance to build up tax-free savings or if you just want to invest like the real adult you are, life insurance can help you make sure you’re making the most out of your money.

So, what are the benefits that make life insurance so important?

Tax-advantaged wealth-building Two things in life are guaranteed: death and taxes. Life insurance helps you with both by allowing you to grow wealth and access the returns tax-free. As you think about your financial future, permanent life insurance means you don't pay any taxes on interest, dividends, or capital gains on the cash-value aspect of your policy if you decide to withdraw.

Safety net for emergency funds Are you worried that your life insurance policy is going to tie up the cash you have on hand? Think again. Permanent life insurance policies let you access your money tax-free when you need it the most. If you want to buy a home or to pay for your child's college, you can take out the cash value of your policy without penalties after a 10 year vesting period (which can be much earlier than 59 ½ for a 401K or IRA account if you’re starting young). If you’re looking to renovate your home or need emergency cash for your family, you can take it out of your permanent life insurance policy without having to tap into your 401K or sell your stocks at an inopportune time and suffer the taxes and penalties that come with those options. Whether you have a large expense you’re planning for or if something unexpected comes up in the future, your policy is there to help you.

Protection in case of illness or injury Every permanent life insurance policy comes with a death benefit. But one reason why life insurance is so important is that you may even be able to receive somewhere between 25% and 100% of the policy before you die. If you develop certain health conditions or you get severely injured and can no longer work or pay the bills, you can access cash from your life insurance policy’s death benefit to take care of anything you need.

That sounds great, but how do I know if I’m someone who needs life insurance?

Parents and Families Every parent wants the best for their kids, and we know you’re no exception. But as college gets closer, the mountain of tuition costs gets scarier and scarier to climb. A permanent life insurance policy gives you a safe and secure way to put money away for your child’s future. Whether you want to pay for their college, help them buy a house (or heck, buy your own house!), life insurance can help you save up for the big expenses of life.

Employers If you own your own business, you probably already know why life insurance is so important. Personal life insurance can protect you in the case that you can’t fulfill your working duties, and the basic options for business insurance typically include workers’ compensation and unemployment insurance for your employees.

Anyone who wants to retire young (or well) Looking to get rich quick? Well, that’s not exactly why life insurance is so important. Instead, your life insurance gives you access to safety and growth, while giving you the flexibility to access emergency cash much earlier than your typical retirement account. That way you can be prepared for whatever life may throw at you, or if it throws nothing at all, you can make the right financial decisions today to have a better, safer, and more secure tomorrow with the right policy.

And if you’re still unsure why life insurance is so important, let Amplify answer any other concerns you have. There are no dumb questions. Seriously. Just ask.

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