January is recognized as Financial Wellness Month, making it a great moment to step back and evaluate your overall financial strategy. One element that often doesn’t get the attention it deserves is life insurance. Many people assume it only becomes important later in adulthood, but it can actually play a meaningful role in your financial stability at every stage of life.

Life insurance can help safeguard those you care about, prepare your household for unexpected events, and in some cases, even support your personal financial goals while you’re still here to enjoy them. Below, we’ll explore how life insurance works, the various kinds of coverage available, and how to ensure the policy you have still fits your needs.

What Life Insurance Is Designed to Do

At its simplest, life insurance provides a financial payout known as a death benefit to the people you choose as beneficiaries. That money can be used to handle major expenses such as mortgage or rent payments, outstanding credit balances, funeral costs, child care needs, or day‑to‑day living costs that don’t pause during difficult times.

Life insurance essentially ensures that your family can keep moving forward financially even if you’re no longer there to support them. It creates quick access to cash at a moment when it may be needed most and helps turn an overwhelming “what if” scenario into something more manageable.

You pay regular premiums to keep your coverage active. In exchange, the insurance company guarantees the payout outlined in the policy. That certainty and added security are key reasons life insurance is often considered an important building block of long-term financial wellness.

Understanding Term vs. Permanent Life Insurance

Most policies fall into one of two categories: term life insurance or permanent life insurance. Each type serves a different purpose, and the best fit depends on your goals, budget, and stage of life.

Term life insurance covers you for a set number of years, typically 10, 20, or 30. If you pass away during that period, your beneficiaries receive the death benefit. If the term ends while you’re still living, the coverage stops unless you renew it or convert it. Term policies tend to be more affordable and work well for people who want protection during higher‑responsibility years—such as when raising children or paying down a mortgage.

Permanent life insurance lasts for your entire lifetime as long as the premiums are paid. These policies also include a savings component called cash value that grows gradually over time. You can borrow from or withdraw this money while you’re alive, though doing so may reduce the final payout your beneficiaries receive.

Within permanent insurance, there are two common varieties:

Whole life insurance comes with level premiums, guaranteed cash value growth, and a guaranteed death benefit. It offers consistency and predictability that some people prefer.

Universal life insurance provides more flexibility. You can adjust your premiums and death benefit, and the cash value is tied to market performance. While this introduces some risk, it also offers more control over how the policy evolves.

Both permanent options can be useful for those who want lifetime coverage or like the idea of blending insurance with a long-term savings component.

Deciding Whether Cash Value Fits Your Needs

The savings feature in permanent life insurance—cash value—is often appealing because it can be tapped into later. It may help fund larger financial needs such as education costs, unexpected medical bills, or additional retirement income.

However, it’s important to understand how it works. Cash value usually grows slowly in the early years of a policy, and borrowing or withdrawing funds can reduce the amount your beneficiaries receive. Permanent coverage also tends to cost more than term insurance, which means it may not fit every budget.

If you want lifelong coverage or prefer fixed premiums, the cash value feature can be a helpful bonus. Still, most people should prioritize contributing to traditional retirement and savings accounts before relying on a life insurance policy as an investment tool.

Optional Riders That Enhance Your Coverage

Life insurance isn’t one‑size‑fits‑all, and that’s where policy riders come in. Riders are optional add‑ons that let you customize your coverage based on your priorities and concerns.

For example, a long‑term care rider can help cover expenses if you ever need extended care due to a major illness or injury. A terminal illness rider may give you access to a portion of your benefit early if you receive a qualifying medical diagnosis. Some term policies even offer a return‑of‑premium rider, which refunds what you paid if you outlive your policy term.

Additionally, certain term policies include the option to convert to permanent coverage later without another medical exam. This can be particularly useful if your health changes and you want long-term protection without navigating the underwriting process again.

These add‑ons can help make your policy more versatile and aligned with your long-term plans.

Simple Ways to Keep Your Policy Current

Reviewing your life insurance regularly is an important part of maintaining financial wellness. A few easy habits can help ensure your coverage keeps up with your life.

Start by reviewing your beneficiaries each year. Life events such as marriage, divorce, or the arrival of a new child can all affect who you want to receive your benefits. Next, check whether the amount of coverage you have still fits your needs. If your income has changed, your debt levels have shifted, or your family has grown, you may need to update your policy.

If you have a term policy, take a moment to see whether it includes a conversion feature. This option can be valuable if you want long-term protection but may not qualify for a new policy down the road.

Finally, build an annual insurance review into your financial routine—just like reviewing your budget or savings goals. A quick check-in can help ensure you’re always protected the way you intend to be.

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