January is recognized as Financial Wellness Month, making it an ideal moment to pause and evaluate your overall financial picture. While budgeting and saving usually get most of the attention, life insurance is another essential tool that often gets overlooked. Many people assume it is only necessary later in life, but it can actually strengthen your financial foundation long before retirement.

Life insurance helps safeguard the people who depend on you, offers stability during unexpected events, and in certain cases, can even contribute to your personal financial goals while you're still alive. Below, we’ll break down what life insurance does, the types of policies available, and how to make sure your coverage still works for your life today.

What Life Insurance Really Provides

At its most basic level, life insurance pays out a death benefit to the people you select as beneficiaries if you pass away. This payout can be used to help manage major responsibilities such as mortgage or rent payments, credit card balances, medical bills, funeral costs, child care, or simply everyday living expenses.

In essence, life insurance keeps your household’s financial plan moving forward, even if you’re no longer there to support it. It provides immediate liquidity—cash your family can use right away—during an incredibly challenging period. You pay regular premiums to maintain the policy, and in exchange, the insurer guarantees a payout under the terms of the contract. That stability is a major reason life insurance is often considered a cornerstone of financial well-being.

Understanding Term and Permanent Life Insurance

Most life insurance policies fall into one of two categories: term or permanent. Although both offer important protection, they operate differently and serve different goals depending on your stage of life, budget, and long-term priorities.

Term life insurance covers you for a set period, typically 10, 20, or 30 years. If you pass away during that timeframe, your beneficiaries receive the death benefit. If the term ends while you're still living, the policy simply expires. Term coverage is often more affordable and is a practical choice for the years when financial responsibilities are highest, such as raising children or paying down a home.

Permanent life insurance, by contrast, provides lifelong coverage as long as you continue paying premiums. These policies also include a savings component known as cash value, which gradually accumulates over time. You can access this money through a loan or withdrawal during your lifetime, though doing so may reduce the eventual death benefit.

Two common types of permanent life insurance include:

• Whole life insurance: Offers consistent premiums, guaranteed cash value growth, and a guaranteed death benefit. It is designed to be steady, predictable, and easy to maintain.
• Universal life insurance: Provides flexibility in adjusting premiums and death benefits. Its cash value grows based on market conditions, which introduces more potential risk but also gives you more control over how the policy fits your long-term needs.

Both types can be valuable long-term planning tools, especially if you prefer lifelong coverage or like the idea of pairing insurance with a savings feature.

Should You Consider Cash Value?

The cash value portion of a permanent life insurance policy is often described as a built-in savings benefit. Over time, the funds can be used to help address large expenses such as education costs, medical needs, or supporting your retirement strategy.

However, it’s important to know that cash value typically grows slowly in the early years of a policy. Any loans or withdrawals you take may reduce the death benefit your loved ones receive. Permanent policies also come with higher premiums than term life insurance, which can affect your budget.

If you already know that lifelong coverage fits your needs—or you appreciate the stability of fixed premiums—cash value may offer helpful added flexibility. Still, many people find it best to fully fund traditional savings and retirement accounts before depending on a life insurance policy for investment growth.

Optional Add-Ons That Personalize Your Coverage

Life insurance policies can be customized with additional features known as riders. These optional add-ons help you tailor your policy to better match your situation and long-term goals.

For example, a long-term care rider can help cover expenses if you develop a serious illness or injury and require extended care. A terminal illness rider allows you to use a portion of your death benefit early if you receive a qualifying diagnosis. If you choose a term policy, a return of premium rider may allow you to get your premiums refunded if you outlive your coverage period.

Some term plans also include the option to convert your policy into permanent insurance later—without going through another medical exam. This can be especially valuable if your health changes over time.

Riders can make your coverage more flexible and more aligned with your long-term financial plans.

How to Keep Your Life Insurance Current

Reviewing your life insurance regularly is an important part of staying financially healthy. A few simple habits can help ensure your policy continues to support your goals.

• Review your beneficiaries annually: Life changes quickly. After events like marriage, divorce, or the arrival of a new child, make sure the right people are named on your policy.
• Reassess your coverage amount: Your income, debts, or household needs may shift over time. Adjusting your policy can help keep your protection aligned with your current life.
• Check for conversion options: If you have a term policy, confirm whether you can switch to permanent coverage without additional medical exams.
• Schedule a yearly policy review: Just like reviewing your budget or savings goals, giving your life insurance a quick annual check can keep everything running smoothly.

If you’d like help evaluating your existing policy or exploring new options, don’t hesitate to reach out. We’re here to support you in protecting what matters most.