January marks Financial Wellness Month, making it an ideal moment to revisit the strategies that keep your financial life running smoothly. One important element many people overlook is life insurance. Although it’s often associated with later stages of life, it can play a meaningful role in protecting your financial stability both now and down the road.

Life insurance offers more than a safety net. It helps safeguard the people who depend on you, prepares your loved ones for unexpected events, and in some cases, even contributes to your own financial goals while you're still here. Below, we’ll unpack what life insurance does, the primary types of coverage, and how to ensure your policy still aligns with your needs.

Understanding the Purpose of Life Insurance

 

At its core, life insurance provides a payout—called a death benefit—to the people you name as beneficiaries if you pass away. This money can ease the financial burden by helping cover essential expenses such as housing payments, outstanding debt, final arrangements, child care, or daily living costs.

In essence, life insurance helps keep your family’s financial plans on track, even during difficult times. It creates immediate access to funds when they’re needed most and transforms a daunting “what if” scenario into something more manageable.

You maintain the policy by paying regular premiums, and in return, the insurer guarantees the benefit outlined in your contract. That commitment is a major reason life insurance is often considered a cornerstone of overall financial wellness.

Term vs. Permanent Life Insurance

 

There are two main categories of life insurance—term and permanent. Each serves a different purpose, and understanding their differences will help you choose the option that best supports your current and future needs.

Term life insurance lasts for a specific period, such as 10, 20, or 30 years. If you pass away while the policy is active, your beneficiaries receive the death benefit. If you outlive the term, the coverage ends. Term life is usually the more affordable option and is well-suited for people who want protection during high‑responsibility years—those times when you’re raising kids, managing major expenses, or paying off a mortgage.

Permanent life insurance stays in place for your entire life, as long as you keep up with the premiums. It also includes a savings component called cash value, which grows slowly over time. This savings portion can be borrowed from or withdrawn while you're alive, although using it may reduce your eventual death benefit.

Permanent policies generally fall into two common types:

• Whole life insurance: This option includes predictable premiums, guaranteed cash value growth, and a guaranteed death benefit. It’s designed for long-term stability and consistency.
• Universal life insurance: This policy offers greater flexibility, allowing you to adjust your premiums and death benefit. The cash value grows based on market performance, which introduces more risk but also provides more control.

Both term and permanent life insurance can play valuable roles in long‑term financial planning. Your choice ultimately depends on your goals, budget, and preferences for lifetime protection or additional savings features.

Should You Consider Cash Value?

 

The cash value feature of permanent life insurance can be a helpful bonus for certain situations. Over time, it may serve as a financial resource for large expenses such as tuition, medical needs, or supplemental retirement income.

However, it’s important to understand that cash value takes time to grow. Early on, it may accumulate slowly, and any loans or withdrawals can reduce the amount your beneficiaries receive later. Permanent policies also tend to cost more than term coverage.

If you prefer lifelong protection or stable premiums, the cash value component may be an appealing feature. Still, most people should prioritize contributing to other savings or retirement accounts before relying on a life insurance policy as an investment tool.

Customizing Your Policy With Riders

 

Life insurance isn’t a one‑size‑fits‑all product, which is why many policies offer riders—add‑on features that tailor your coverage to your unique needs.

For example, a long‑term care rider can help pay for care if you develop a chronic illness or injury that requires ongoing assistance. A terminal illness rider allows you to access part of your death benefit early if you receive a qualifying diagnosis. For term life insurance, a return‑of‑premium rider may give you back the premiums you paid if you outlive the term.

Some term policies also allow you to convert to permanent coverage later without another medical exam. This can be especially helpful if your circumstances change but your health makes it more difficult to qualify for a new policy.

These optional features can make your policy more adaptable and better aligned with your long‑term plans.

Keeping Your Coverage Updated

 

Making sure your life insurance stays up to date is an important part of financial wellness. These simple steps can help you keep everything in line with your goals:

• Review your beneficiaries annually. Life changes—such as a marriage, divorce, or new child—may mean updating who receives your death benefit.
• Reevaluate how much coverage you need. Your income, debt, or family size may shift over time, which could require adjusting your policy.
• Check for conversion options. If you have term life insurance, see whether your policy allows you to switch to permanent coverage without further medical exams.
• Conduct a yearly policy review. Just like updating your budget, taking a moment each year to review your coverage can help ensure it still fits your financial life.

If you’d like help reviewing your current life insurance or exploring new options, reach out anytime. We’re here to support you as you protect what matters most.