Why Life Insurance Plays a Crucial Role in Your Financial Well‑Being

January Is a Great Time to Reassess Your Financial Health

With the start of a new year comes Financial Wellness Month—a perfect reminder to revisit your broader financial picture. One area that often gets pushed aside is life insurance. Many people tend to think of it as something only older adults need, but in reality, life insurance can strengthen your financial foundation at every stage of life.

It not only helps safeguard the people you care about but can also support your long‑term goals. Some policies even offer living benefits that complement your financial planning. Below, we’ll break down how life insurance works, the different types available, and what you should evaluate to keep your coverage aligned with your evolving needs.

How Life Insurance Works

Life insurance is designed to deliver a payout—known as a death benefit—to the beneficiaries you choose when you pass away. This money can ease the financial strain on your loved ones, helping cover expenses such as housing costs, outstanding debts, funeral arrangements, and general day‑to‑day living needs.

Ultimately, having life insurance means your family’s financial progress doesn’t come to a sudden halt if something unexpected happens. It creates immediate access to funds during a difficult time and reduces the burden of uncertainty.

You maintain coverage by paying regular premiums. In exchange, the insurance company promises to provide the death benefit as outlined in the policy. This assurance is one of the reasons many people see life insurance as an essential part of a solid financial wellness plan.

Comparing Term and Permanent Life Insurance

Life insurance generally falls into two categories: term and permanent. Each option fills a different need, and the best fit for you depends on factors like your age, financial responsibilities, and long‑term planning goals.

Term Life Insurance

Term life insurance covers you for a set period—commonly 10, 20, or 30 years. If you pass away during that timeframe, your beneficiaries receive the death benefit. If the term expires and you’re still living, the coverage ends. This type of policy is often more budget‑friendly and is a popular choice for people who want protection during high‑demand years such as raising children or paying off a home loan.

Permanent Life Insurance

Permanent life insurance lasts your entire lifetime as long as premiums are paid. It also includes a cash value feature that grows gradually over time. This savings component can be accessed while you’re alive through withdrawals or loans, though doing so may reduce the final payout to your beneficiaries.

Two common forms of permanent life insurance include:

• Whole life insurance: Offers predictable premiums, guaranteed cash value accumulation, and a fixed death benefit. It’s a stable and structured option.
• Universal life insurance: Provides more flexibility. You can modify your premium payments and death benefit, and your cash value growth is influenced by market performance. This means it carries more potential variability but greater control.

Permanent policies can be beneficial if you want lifelong protection or appreciate the added savings element that builds over the years.

Should You Consider Cash Value?

The cash value portion of permanent life insurance is often viewed as a helpful extra. Over time, it can serve as a resource for significant expenses such as tuition, medical costs, or supplemental retirement income.

However, it’s important to approach it with realistic expectations. Cash value takes time to grow, especially in the early years. Using it—either by borrowing or withdrawing—may reduce the death benefit available to your loved ones later. Additionally, permanent insurance usually comes with higher premiums compared to term coverage.

If you need lifelong protection or value fixed premiums, the cash value feature can be a meaningful addition. Still, most people should ensure they’re contributing to essential savings and retirement accounts before relying on a life insurance policy as an investment tool.

Customizing Your Coverage With Policy Riders

Life insurance isn’t a one‑size‑fits‑all product, which is why riders exist. These optional add‑ons help tailor your policy to better match your personal needs.

For instance, a long‑term care rider may help pay for ongoing care if you can no longer manage daily tasks due to illness or injury. A terminal illness rider allows you to access part of your death benefit early if you receive a qualifying diagnosis. If you’re buying term insurance, a return‑of‑premium rider could allow you to recover the premiums you paid if you outlive the policy.

Some term policies also offer a conversion feature that lets you switch to permanent coverage later on without going through another medical exam. This can be incredibly valuable if your health changes and obtaining new coverage becomes more challenging.

These riders can enhance your policy, offering a more personalized and flexible approach to long‑term protection.

How to Keep Your Life Insurance Updated

Maintaining current and relevant life insurance coverage is a key part of staying financially healthy. Here are a few simple habits that can help:

• Review your beneficiaries each year. Make sure the people listed are still the right individuals, especially after major life events such as marriage, divorce, or the arrival of a new child.
• Evaluate your coverage amount. As your income, debts, or household responsibilities change, your policy should reflect those shifts.
• Check for conversion options. If you hold a term policy, confirm whether you have the ability to convert to permanent coverage later without additional medical requirements.
• Schedule an annual policy review. Treat it like reviewing your budget or updating your financial goals—quick, simple, and extremely valuable.

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