Three Big Ways That Life Insurance Can Be a Lifeline
Life insurance not only provides a safety net for loved ones and leaves behind a lasting legacy, but the cash value can also help during financial hardship.


The importance of life insurance transcends monetary value by encapsulating emotional reassurance, legacy preservation and strategic financial planning.
While it is a crucial part of the financial planning process, it is also something that is often overlooked. According to Life Insurance Marketing Research Association (LIMRA), at least 106 million Americans, or 41% of Americans, don’t believe they have enough life insurance coverage.
Without life insurance, you may pass away with financial obligations that become the responsibility of your heirs. While there is no one-size-fits-all approach, here are three ways that life insurance can help:

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
1. Creating a cash safety net and providing emotional security.
By carving out a pre-determined sum of money, life insurance helps ensure that dependents are not burdened with insurmountable financial challenges when a loved one passes away. Without this safety net, families might find themselves in the worst-case scenario of grappling with financial hardships, potentially jeopardizing their future and well-being.
Additionally, the peace of mind that life insurance can provide during unpredictable moments is invaluable. For example, if the main breadwinner in a relationship suddenly passes, the family will have a source for income replacement if their financial situation takes a turn for the worse. Knowing that loved ones will be cared for, debts will be settled, and dreams will be realized can help alleviate anxiety and foster a sense of stability for all.
2. Leveraging cash value.
Having a life insurance policy also serves as a strategic financial tool, offering tax advantages and investment opportunities. Depending on the type of policy selected, individuals can leverage life insurance to accumulate cash value over time.
This cash value component provides the flexibility for policyholders to access funds for various purposes, such as supplementing retirement income, covering unexpected expenses or pursuing lifelong dreams. However, it is important to note that withdrawing funds from your policy reduces the death benefit for your heirs if it is not paid back.
Earlier in my career, I worked as a financial adviser and wrote a policy for my client that included an investment feature to create cash value growth. That cash value was eventually used by my client when their business was struggling, providing them with much-needed liquidity when financial institutions would not. The liquidity allowed them to turn their business around, with enough success that they could repay the policy loan in full.
3. Leaving a lasting legacy.
The legacy that life insurance can provide may come in many different forms, from ensuring quality education for children to leaving behind an inheritance that can support future generations.
When working with the previously mentioned client, I had to deliver a life-changing $2 million check when they unfortunately became widowed. This experience allowed me to see firsthand the lasting legacy and support that their life insurance policy provided. The death benefits from her husband’s policy gave my client the means to provide for their two young children and money to support their business needs.
This one policy served as both a cash safety net in troubled times while her husband was living and a conduit for allowing their aspirations and accomplishments to endure when he was gone.
In essence, life insurance empowers individuals to live fully, knowing that legacy will endure, and loved ones will thrive, regardless of life's unpredictable twists and turns.
Related Content
- If You’re Retired, Do You Still Need Life Insurance?
- Five Financial Changes That Happen When Your Spouse Dies
- Are You Too Young for Life Insurance?
- What Is Indexed Universal Life Insurance and How Does It Work?
- Want to Feel Better About Life Insurance? Go Digital
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Steve Sugumele manages the distribution of Life and Long-Term Care solutions for Citi Personal Wealth Management in the U.S. His teams provide estate and insurance planning solutions, including business succession funding, wealth conservation and transfer strategies for high-net-worth individuals, business owners and professionals. He has over 25 years of experience managing teams and working with advisers and their clients in the institutional and retail spaces.
-
13 Answers to Pressing Social Security Questions
From smart claiming strategies for couples to tips on maximizing your monthly check, we have advice that can help you.
-
Keep Tax Collectors at Bay with Muni Bond Funds
Municipal bonds can be good insurance against inflation — and interest is tax-free. But as with all investments, understanding risk is key.
-
Eight Tips From a Financial Caddie: How to Keep Your Retirement on the Fairway
Think of your financial adviser as a golf caddie — giving you the advice you need to nail the retirement course, avoiding financial bunkers and bogeys.
-
Just Sold Your Business? Avoid These Five Hasty Moves
If you've exited your business, financial advice is likely to be flooding in from all quarters. But wait until the dust settles before making any big moves.
-
You Were Planning to Retire This Year: Should You Go Ahead?
If the economic climate is making you doubt whether you should retire this year, these three questions will help you make up your mind.
-
Are You Owed Money Thanks to the SSFA? You Might Need to Do Something to Get It
The Social Security Fairness Act removed restrictions on benefits for people with government pensions. If you're one of them, don't leave money on the table. Here's how you can be proactive in claiming what you're due.
-
From Wills to Wishes: An Expert Guide to Your Estate Planning Playbook
Consider supplementing your traditional legal documents with this essential road map to guide your loved ones through the emotional and logistical details that will follow your loss.
-
Your Home + Your IRA = Your Long-Term Care Solution
If you're worried that long-term care costs will drain your retirement savings, consider a personalized retirement plan that could solve your problem.
-
I'm a Financial Planner: Retirees Should Never Do These Four Things in a Recession
Recessions are scary business, especially for retirees. They can scare even the most prepared folks into making bad moves — like these.
-
A Retirement Planner's Advice for Taking the Guesswork Out of Income Planning
Once you've saved for retirement, you'll need your nest egg to support you for as many as 30 years. For that, you need a clear income strategy, not guesswork.