Start the Year with a Fresh Look at Your Financial Health
January marks Financial Wellness Month, making it an ideal moment to reassess your overall money strategy. While budgeting, saving, and investing often get the most attention, there’s another important piece that many people overlook—life insurance. Although it’s often associated with later stages of life, the reality is that life insurance can strengthen your financial stability at every age.
Life insurance doesn’t just support your loved ones after you’re gone—it can also provide valuable benefits while you’re still here. Let’s break down what it does, the different types of policies available, and how to make sure your coverage keeps up with the changes in your life.
Understanding the Purpose of Life Insurance
At its simplest, a life insurance policy provides a payout, known as a death benefit, to the people you choose if you pass away. Your beneficiaries can use that money to cover major expenses such as housing payments, credit card balances, final arrangements, child care, or day‑to‑day living costs.
In other words, life insurance helps your family stay financially steady during a difficult time. It offers access to needed funds, helping reduce the stress of unexpected events and offering a measure of protection for your long‑term financial plans.
You maintain this coverage by paying regular premiums. In exchange, the insurer guarantees a payout under the contract’s terms. That assurance is one reason many experts consider life insurance a foundational part of financial wellness.
Term vs. Permanent Life Insurance
Life insurance typically comes in two main varieties: term and permanent. Each type has unique features, and the best fit depends on your goals, your budget, and where you are in life.
Term Life Insurance
Term life coverage lasts for a set number of years—often 10, 20, or 30. If you pass away during that period, your beneficiaries receive the death benefit. If you outlive the term, the policy simply expires. Because it’s generally more affordable, term insurance is a popular choice for people who want protection during key financial years, such as while paying off a home or raising children.
Permanent Life Insurance
Permanent insurance stays in place for your entire life as long as you continue paying the premiums. These policies also come with a cash value component, which acts like a built‑in savings feature. This cash value grows over time and can be borrowed against or withdrawn under certain conditions—though doing so may lower the final benefit your loved ones receive.
There are two common varieties of permanent coverage:
- Whole life insurance: Offers fixed premiums, guaranteed cash value growth, and a stable death benefit. It’s designed to be steady and predictable.
- Universal life insurance: Provides more flexibility. You can adjust your payments and the size of your death benefit, and the cash value may grow in relation to market performance. With that flexibility comes more potential variability and risk.
Permanent policies can be valuable if you want lifelong coverage or like having a savings component woven into your insurance plan.
Should You Consider Cash Value?
The cash value feature that comes with permanent life insurance can be appealing. Over time, it may help cover large expenses such as education costs, major medical bills, or supplemental retirement income.
However, it’s important to go in with clear expectations. Cash value typically grows slowly in the early years, and taking money out—whether through loans or withdrawals—can reduce the death benefit. Permanent coverage also tends to cost more than term insurance.
If you already anticipate needing lifetime protection or you appreciate the stability of fixed premiums, cash value can be a meaningful addition. Still, most people should ensure they’re contributing sufficiently to retirement accounts and other savings vehicles before relying on life insurance for investment purposes.
Riders: Customizing Your Policy
Life insurance policies aren’t one‑size‑fits‑all. Riders—optional add‑ons—let you personalize your coverage based on your situation and preferences.
Examples include:
- Long‑term care rider: Helps cover the cost of extended care if you become seriously ill or injured and need daily support.
- Terminal illness rider: Allows you to access part of your death benefit early if you receive a qualifying diagnosis.
- Return of premium rider: Available on some term policies, this option refunds the premiums you paid if you outlive the policy.
Some term policies also offer a conversion feature, allowing you to switch to permanent coverage without completing a new medical exam. This can be especially helpful if your health changes over time.
These added features can make your policy more adaptable and aligned with your long‑term goals.
How to Keep Your Coverage Up to Date
Part of staying financially healthy is making sure your life insurance still reflects your current needs. Here are simple habits that can help you stay on track:
- Review your beneficiaries annually. Make sure the right people are listed, especially after big life milestones such as marriage, divorce, or welcoming a child.
- Check your coverage amount. As your income, debt, or household size changes, the amount of insurance you need may shift as well.
- Look for conversion options. If you have a term policy, see whether you can convert it to permanent coverage without another medical exam.
- Do a yearly policy check‑in. Treat your life insurance review the same way you treat your budget or savings assessment—a quick annual look can help keep everything aligned.
If you’d like support as you evaluate your existing coverage or explore policy options, we’re here to help you protect the people and priorities that matter most.