Why Is Life Insurance Important?

Why Is Life Insurance Important?

As we come to this year’s close of Life Insurance Awareness Month, I was asked this question by a young prospect this week, why is life insurance important? To answer this question is no different than answering any question about why is insurance important? Insurance simply is transference of risk from one person to another. People carry car insurance in case they wreck or have their car stolen. This transference of risk keeps the auto owner from having to replace his car out of his own pocket. Most state laws require auto insurance. Now we have the Affordable Care Act or Obamacare that requires everyone carry health insurance. Why would anyone think life insurance is not important?

I find most responsible people purchase some type of insurance even if it is required by financing such as home owners insurance because the mortgage company requires it or car insurance because of an auto loan. When you think about it we worry about replacing our stuff more than ourselves. We, as human beings, are more valuable than any item we purchase regardless of price.

I’ll tell you why life insurance is important. Life insurance mends family finances in case of an untimely death. Life insurance is the most affordable solution to help loved ones through a difficult time. The proceeds from life insurance pay costly bills and allow family members time to grieve and heal. It keeps the lights on and food on the table during a hiatus from work. It allows children to attend college and fulfill their dreams. It pays for repairs when things break and you are no longer there to repair them. Life insurance keeps them in the family home where all of the memories are and doesn’t force them to immediately move due to finances. Without you being there income is cut in half if not more. You took a wedding vow that you promised to take care of each other forever, life insurance allows you to honor your vow after death.

Life insurance is very important to the ones you care about most. Insure your stuff to transfer risk but buy life insurance to insure your love. We all have an expiration date and we don’t know when that date will come. See life insurance is more than transference of risk. It builds a wall of protection for your loved ones.  It is one of the most responsible things a person can do for the ones they love.

You must take personal responsibility. You cannot change the circumstances, the seasons, or the wind, but you can change yourself. That is something you have charge of.Jim Rohn

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Tim Wilhoit is owner/principal of Your Friend 4 Life Insurance Agency in Nashville, TN. He is a family man, father of 3, entrepreneur, insurance agent, life insurance broker, salesman, sales trainer, recruiter, public speaker, blogger and team leader with over 27 years of experience in sales and marketing in the insurance and beverage industries.

48 Responses to Why Is Life Insurance Important?

  • Most importantly,it’s keeps the loved ones in their world without disruption…but under the radar,it can create a tax-free supplement for their retirement,and in some cases more

  • I couldn’t agree more Fred, thanks for sharing.

  • Well said and accurate. Further more with the NO COST living benefits the term WITH LB there is even more reason to get into a policy right away. One in two males will have a bout with cancer and one in three females, so with no cost living benefits and no tax as it is an accelration of the death benefit. My favorite part is that the cap is 90% of the face amount, you have a very good chance of living through the malady.

  • Phil, that is an excellent point. There are just so many uses for life insurance these days. A solid financial plan cannot afford to be without it. Thanks for sharing.

  • Tim, You know my stance on this subject. It’s very Important !!!! no doubt about it.
    Have a Great DAY. Mario

  • Very true Mario, I always appreciate your feedback.

  • L’assurance vie, c’est du pain sur la table pour les enfants, et un toit pour la veuve.

  • I always enjoy reading your articles. It gives me ideas on how to approach my life clients in Oregon. Keep up the good work #Tim!

  • Kyla, thank you so much for your kind words and encouragement. I am truly grateful for your following my articles. Always glad to be of help.

  • I would ask the question to people /families that have been left financially crippled due to the death of the income earner or worse the long term illness of the income earner. Its no good asking for a financial hand out when the income earner has departed or when diagnosed with a crippling and fatal disease.
    However in saying that I think we have to give two messages to people and businesses that have key people . The first message is 1) be aware of the necessity to maintain and optimise your health to prevent degenerative diseases and thus ensure your life will be beneficial to not only themselves but to their families and their business (if they own one)
    Second message. What if your financial value to most importantly your family , your bank and creditors and finally to your business

  • John, excellent points! I really appreciate you sharing on our discussion.

  • It would be a wise and productive meeting of minds if more life insurance specialists worked more closely with investment/financial/advisors and vice versa. While many life insurance specialists only have limited knowledge about financial strategies, the investment/financial advisors generally have a limited understanding about the utilization of life insurance!

  • Phil, that is excellent advice. I find the couple of fee based CFPs I work with are some of my best referral sources and It is easy for me to repay the referrals to them as well.

  • In its basic form, life insurance is a common need. I have to question whether or not we, as sales reps, are making coverage more complicated than what it should be. Perhaps we should get back to basics. Ya think?


  • Daniel and John thank you for sharing. John, to your point, you are spot on. Too many agents get caught up in their own knowledge and think the client cares. If the client asks you what time it is, he doesn’t care how your watch works. Basics is what sells life insurance to the masses. Great point and I appreciate you making it.

  • Hi, it is true and one must considered this fact and protect your family as well as others.
    Sir, is there are any slogans to make awareness in the public which we can progress
    towards insurance business.

  • Dattaram, not sure if there is one slogan to bring awareness why the vast majority of the country needs life insurance. My BNI networking tag line is “because dying sucks, don’t do it for free”, but I can’t say that sells more policies but it is always remembered. Good luck my friend.

  • John, good points and good points are always on like. I would like to add one more point that too for your opinion….! Suppose you don’t get advantage of life insurance because you are lived, it is good thing and precious value for life but other way you are helping some one’s back of his life, it is how— your fund value is used when company gets more and more claims at any time. that means you are lived but you have shared help for others. Is not great thing…!

  • Life insurance is financial and life security. It is the means of assuring and securing circumstance that we have no control over.

  • Fascinating. This is where I would like to suggest or question 1) At what point do we not have control and 2) Surely this aspect Funmi comes in from the point of me having an insurable interest in the existence of my wife or my business partner.
    So lets look at Item 1) We do actually have control over our health and personal destiny. Only 5% of diseases are Genetic and these diseases are not always terminal. So the other 80%-95% of degenerative diseases are preventable. Note it did not say they are curable. So we have a choice of how we live our lives and what we eat. Now if we lived in a perfect world and everyone was of the right mind set from an early age to look after their inner health to a molecular level would there be such a demand for Life Insurance or Trauma Insurance. I suspect not. Death by accident is only 5%. So there is a necessity for each and every one of us to understand the dynamics of the science within each of us so we can realize the issues and challenges of damaging our DNA from pollution, toxins and chemicals in our food we eat and drink every day let alone the stress that we put our mind and body under on a day to day basis.
    Item 2) I have no control on the lifestyle of my business partners or on their health. (Mind you in a perfect world we should incorporate this into company values and mandates )I do have control over my wifes health. But in the event of death or illness of my business partners what I do have at risk in regards to the completion of a project or an investment is the loss of money and the increased costs of realigning the project.
    So to me I think we in the Insurance industry need to relook at risk and understand the factors affecting our stance on marketing and how we approach the subject of insurance to the man on the street.
    Dattaram. I trust this has answered your question. The advantage of Life Insurance because of where I live? I would like to answer this in another way. When in the third world countries where there is no free education and there is a desire to learn then the children will do what ever is possible to learn .They are eager and keen.to learn even without computers. In Western countries education is taken as a given and the parents and children become complacent about the gift. People have to recognise that it is an advantage to be able to buy life insurance easily . But the risk of ease is complacency
    and the belief that what ever happens, happens. Releasing responsibility to the will of what ever God you believe in. They use to think like this 2000 years ago. We have not moved very much further have we ?

  • Its a pleasure . I started my career in the life industry and then moved to Fire and general insurance specialising in Marine Insurance ,insuring cargo and ships. However time has moved on and although I still operate a business in the Fire and General world I have a passion for peoples health and well being. Sadly what people even in our industry dont take into account is that the financial solution in times of Crisis does not cater to the hidden unknown knowns. Ie financial support in times of Crisis is only 20% of the risk. The other 80% of the metaphorical iceberg is not dealt with.

  • Why life insurance important? I always ask this question myself first and after getting a satisfactory answer for myself, only then I face the customer to satisfy their needs. It is good to put ourselves to the customer position first to find out the satisfactory answer for the same need.It is very much essential for every salesman in life insurance industry to know the basics and details about product , service and the Importance of the designed product. She/he must have the ability to read the customer needs because Importance of life insurance is significantly different to different level of customer/suspects needs. Here some examples given based on my practical dealings with different level of suspects.

    When a suspect comes to me age above 55, I always try to convince them by detailing Medicare products / annuity products and it works well or I tell them term insurance for 10 years. When suspect asked for benefit or profit against their investment behind insurance then I put my bookies theory aside and I detail about cash value or endowment products and it works. (As it has cash value and risk coverage means two in one). When people ask for short term products I prefer to detail about term Insurance product etc. When internal customers/ field force asks me about the importance of this I mention their sales volume which is the live example of the importance of life Insurance. Now let me share some examples of importance of life Insurance on some different level of people needs.

    Example-01: Alex is an Artist who supports himself by selling his artwork. What will be happened when he retires and his income is no longer sufficient to meet his economic needs?
    Example-02: John is a 25 years-old single man who is working his way through university with part-time jobs. What if he becomes ill and requires a long hospital stay and expensive medical treatment?
    Example-03: John and Elena are working parents of two school aged children. What if either John or Elena disabled and can’t work to support the family?
    Example-04: Alex has taken bank loan against Car/ Mortgage loan/ Credit card or he has other business debts what if anything goes wrong with him? How mortgaged property will be saved? Case likes this we should tell him how life insurance helps his dependants to ease this burden within 5/10 years term? Thanks should go to Tim for selecting this topic

  • Let me ask another question? We provide a financial solution to people and businesses to cover off those traumatic times when a person dies or has a critical illness. We also supply financial security to people in the event that they can not work and we play with , manage , advise on the benefit periods. But what happens when 1) the money runs out or 2) the benefit period runs out . You can not buy a replacement insurance policy for a top up.
    Its sort of like fixing the “hole in Henrys metal bucket” What ever is tried as a solution it still comes back to the same problem. There is a hole in the bucket and it will not hold water.
    So whats the solution to ensure that people can maintain income after the benefit period has finished or there is continual funds available even if the original sum insured has been consumed. Because this is the issue with insurance. Its a short term fix and its not getting to a sustainable resolve

  • John, your comment on the financial contribution insurance offers in event of illness,incapacity and death set me thinking on the benefits of life assurance.

    Life Insurance is a risk bearing instrument that soften the effect of financial incapabity.

    I like to know what other benefit of life assurance you are driving at.

  • Life insurance provides short term financial relief for the known costs and the recognised financial issues the could arise but not identified . The Known unknowns.
    However when the cash is consumed and maybe its all gone due to crazy spending or bad investment choices whats left . Nothing
    So what can be done. I am very much in favour of “you may call it risk management” I call it prevention. How to manage and prevent illness and disease from occurring. Note I did not say cure. This takes a monumental shift in thinking . So rather than selling /providing life insurance based on emotion and fear of “what happens if ” we are seen to reduce the risk by advising on preventing disease and maintaining health at its optimum.
    The benefits are numerous as well as having the ability to continue to earn

  • John, I do agree with what you are saying. My wife and I are going through the C.H.I.P. (I’m sure you are familiar) program as we speak. Here lies the rub, selling lifestyle change is a lot harder than selling life insurance. I salute you and your cause. It is the biggest issue we face in the US.

  • I do not know of C.H.I.P.
    Selling lifestyle change ? People want to have to change before there can be any change.
    Its a mind game but an important mind game. If you sell something to somebody you are creating stress in their head. If they buy something because they want it then there is no stress and they will follow through because they have identified with their “why”
    But the challenge is for people to understand their why.
    Let me give you an example. I repair and restore Sunbeams (yes a bit – but its my relaxation point ) I enjoy finding out what’s wrong with things, breaking it down and repairing it .My kicker out of this is understanding what was wrong and fixing it so it is as good as new.
    So with Human health I want to know and understand what is going on because then we can start to find ways of preventing the illness and thus removing the fear and stress in peoples lives

  • If anyone has a moment please ready – so important for individuals and their familys to be responsible and make sure your not just putting it off as ………it will never happen me…….

  • Tim as an Insurance professional I have taken this oath made by me. ” I solemnly promise to dedicate my life to the service of humanity. I shall follow the indications of the rules and regulation of the company. I shall devote my self for the unity and integrity of the agency and my family. May Almighty give me the courage to build up my career as a prosperous one and obliged Ameen”

  • Jennifer thank you for your kind words and sharing. Riazul, a very powerful mission statement my friend. You WILL be successful in our industry, no doubt about it.

  • Tim acknowledged from the core of my heart and appreciated

  • Life Insurance is so important for some various reasons . Life insurance provide financial protection of our children and loved ones. It covers and ensured all my debts ( Face Amount ) It replaces ones income of his/her absence . It cover the cost of family needs .It protect mortgage property against bank loan. ( Face amount should be the same amount of mortgage value) It encourages savings and caring old aging parents ( Nominees) and so on and on …..

  • The “importance of life insurance” is to acknowledge that we care about those we leave behind and help alleviate some financial stress.
    Ensuring that our family members don’t have to languish in undue financial uncertainty and hardship…is truly a way of taking care of them after we no longer physically can.

  • Wow Tim! What an excellent description of why one should buy life insurance. I’ve been an agent for 30 years. During that time I don’t think I’ve ever read a better description. Thanks for sharing your thoughts with us.

  • Lanny, I am truly grateful for your kind words. Thank you for making my day!

  • Tim. V.gd emotional answers.
    “mends family finances in case of an untimely death
    “Life insurance is the most affordable solution to help loved ones through a difficult time
    “It keeps the lights on and food on the table..
    “It pays for repairs when things break and you are no longer there to repair them.
    “Life insurance keeps them in the family home where all of the memories are and doesn’t force them to immediately move due to finances.
    “You took a wedding vow that you promised to take care of each other forever, life insurance allows you to honor your vow after death.

  • Hi Tim – Why is Life Insurance Important?
    I usually will tell my client that –
    For Family – We helps you to make sure that there is food on the table when you can’t do it.
    For Individual – A person responsibility to take care of your then to add burden to others. (Self-Esteem)

  • Tony and Jacqueline, thank you for your kind feedback. I am glad you enjoyed my article.

  • Try asking the question to a family that has been left destitute because the main bread winner and also maybe business owner has made some really stupid decisions to the point that the business has no value or the house has a mortgage that can not be serviced any longer .
    It kind of get my goat . Many people say they don’t believe in insurance . Well have a look around at the world if there was no insurance. The chap that owns the Porsche and the boat and all the nice things in life .If there was no such thing as insurance then the cost of replacing or buying the item new would be beyond most peoples pockets.
    Insurance has become the spinal cord of the capitalist world.
    I am almost at the point of telling the people to go and get a life . Yet I know that every objection must be seen as an opportunity. But then you just keep getting the same triggers like the jokes in a Christmas Cracker .Same joke just different wrapping on a different year .

  • John, wells said. Thank you for sharing it.

  • Wonderful article. To be shared with all people in all walks of life. Good one Tim.

  • Awesome! You put into no nonsense words the truth about life insurance. Thank you!

  • John your points are well put. As we are living longer today it is better now to address a change in lifestyle to help stay healthy as long as possible. So many people are over weight and are diabetec which can limit their ability to get insurance. Life insurance helps when an unthinkable accident happens takes away the main income earner in a family to get back on their feet. Also having the money to pay for the expenses when a person passes is another reason to have insurance.

    Having insurance is not the end all answer but it does help while a person or family is making the necessary adjustment and that point needs to be pointed out when it is sold to person or family.

  • Patricia. We are not living longer . Its just the probabilities of living longer are better . The difference is not so much at the senior end of the scale but more so at the beginning . The number of deaths at child birth or soon after have been cut back dramatically. However the illness and types of illnesses now facing the human ace has grown dramatically
    Here are some statistics . 1 in 3 die of degenerative heart disease . 1 is 3 die of cancer , 1 in 4 children have type 2 diabetes and its getting worse , 30% of the population is overweight 1 in 4 adults have some form of mental illness at some stage of their lives 4 out of 5 people have Leaky Gut or are suffering from the affects ,thus affecting our immune system 1 in every four have Celiacs disease of which many of the above issues can contribute to if not managed and prevented. Of course that’s not even discussing those that die from incorrect or wrongful application of prescription medicines.
    So buying insurance is purely providing the funds for dealing with symptoms of a much bigger cause. Buying insurance is the lazy way out of a situation.
    I have insurance on my life and my wifes life and to cover the business which we own. Although as a person who suffers from Leaky Gut but have it managed I also see the necessity to take the best supplements I can take to act as a preventative and manage the optimal health. So I believe that people should buy and yet also build into the regime preventative measures so then their dependency on insurance can be reduced as they become older for two reasons 1) as the stats show as we get older the probabilities of issues increase and thus the premiums increase but with prevention as management early in life those probabilities start to drop back 2) because we have taken up prevention and recognizing the issues that can accumulate over time we can have confidence in knowing that we will reach the age of m70 with out major issues befalling us if we start on

  • An essential part of financial planning is creating provisions for your family and loved ones following your death. Life insurance can ensure financial security to those who mean the most to you, such as your spouse, children and dependent parents. A carefully executed life insurance policy can help prepare for life’s uncertainties and give peace of mind knowing that the future of those who rely on you is secure.

  • John, thanks for sharing. In deed medical cost is the main issue in Life Insurance Planning. Over here in Singapore when we mention Life Insurance, Medical Insurance is the basis. Without it, non of the death coverage for dependent and saving is protected. Personally I guide my team in a holistic Risk Planning instead of just Life coverage.
    I will hope to see more people in our industry practising the Financial Planning process instead.

  • Why is life insurance important ?
    An essential part of financial planning is creating provisions for your family and loved ones following your death. Life insurance can ensure financial security to those who mean the most to you, such as your spouse, children and dependent parents. A carefully executed life insurance policy can help prepare for life’s uncertainties and give peace of mind knowing that the future of those who rely on you is secure.

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