January marks Financial Wellness Month, making it an ideal moment to step back and evaluate how well your financial strategies are working for you. While budgeting, saving, and investing often take center stage, one essential tool that doesn’t always get the attention it deserves is life insurance. Many people associate it only with later stages of life, but it can actually strengthen your financial foundation at any age.

Life insurance provides stability, protects the people you care about, and can even contribute to your personal financial goals while you're still here to enjoy them. Below, we’ll break down what life insurance does, the policy types available, and how to ensure your current coverage still matches your needs.

What Life Insurance Really Offers

Life insurance is designed to provide a payout, known as a death benefit, to the individuals you select as beneficiaries when you pass away. This financial support can help your loved ones stay on their feet by covering significant expenses such as housing payments, credit card balances, final arrangements, child care, or everyday living costs.

Essentially, life insurance helps your family maintain financial stability during one of the hardest moments they’ll face. It creates an accessible pool of funds right when it’s needed most and replaces uncertainty with a plan.

You maintain your policy by paying scheduled premiums. In return, the insurance company promises to pay the agreed-upon benefit under the terms of the policy. That reassurance—which offers both emotional and financial comfort—is a big reason life insurance is often viewed as a cornerstone of financial wellness.

How Term and Permanent Life Insurance Differ

Life insurance generally falls into two main categories: term and permanent. Each type serves a different purpose, and the best choice for you will depend on your current responsibilities, long-term goals, and budget.

Term life insurance covers you for a specific period—commonly 10, 20, or 30 years. If you pass away within that timeframe, your beneficiaries receive the death benefit. If you outlive the term, the coverage ends. Term insurance tends to be more cost-effective and is often ideal for people who want protection during their highest financial responsibility years, such as while raising children or paying off major debts.

Permanent life insurance provides lifelong coverage as long as you keep the policy active. It also builds cash value over time, which you can tap into while you’re still living. Depending on how you use it, withdrawing or borrowing from this cash value may reduce the ultimate death benefit.

Common Types of Permanent Coverage

Whole life insurance comes with predictable payments, guaranteed cash value growth, and a promised death benefit. It’s steady and straightforward, making it a strong option for those who prefer consistency.

Universal life insurance offers more flexibility. You can often adjust your premiums or death benefit, and the cash value accumulates based on interest rates or market performance. This option introduces more variability but also more control.

Both forms of permanent insurance can be valuable for long-term planning, especially if you want protection for life or you appreciate the ability to build savings within your policy.

Is Cash Value a Good Fit?

The cash value element in permanent life insurance can serve as a long-term financial tool. Over time, it may help with big-picture goals like covering educational expenses, paying for medical needs, or supplementing retirement income.

That said, it’s important to understand how it works. Cash value generally grows slowly at the beginning, and taking loans or withdrawals from it can reduce the final payout your beneficiaries receive. Permanent policies also cost more than term insurance, which can affect your overall financial plan.

For people who already know they want lifetime coverage or prefer steady, predictable premiums, cash value can be a meaningful benefit. Still, it’s usually wise to prioritize contributions to retirement accounts and emergency savings before relying on insurance-based savings features.

Riders That Customize Your Coverage

Because every household has its own needs, life insurance can be personalized with riders—optional add-ons that enhance or tailor your coverage.

For instance, a long-term care rider may help cover the cost of caregiving if you face a serious illness or injury. A terminal illness rider allows early access to a portion of your death benefit if you receive a qualifying diagnosis. With some term policies, you can add a return of premium rider, which reimburses the premiums you paid if you outlive the policy term.

Certain term policies even include a conversion feature, letting you shift to permanent coverage later without completing another medical exam. This can be especially helpful if your health changes over time.

These additions can make your policy more adaptable and better aligned with your evolving goals.

Simple Ways to Keep Your Policy Up to Date

Life insurance works best when it reflects your current situation. A few regular check-ins can help ensure that your coverage continues to support your financial wellness.

Start by reviewing your beneficiaries once a year. Life events such as marriage, divorce, or the arrival of a child can change who you want listed. Next, reassess your coverage amount. If your financial responsibilities or income have changed, your policy may need to be updated.

If you have a term policy, find out whether it includes a conversion option. Even if you don’t need it right now, knowing you can switch to permanent coverage later without another medical evaluation can be valuable.

Lastly, make it a habit to review your policy annually—similar to how you evaluate your savings, budget, or goals. A quick update can help keep your financial plan on track.

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