Why life insurance supports long-term financial health

January marks Financial Wellness Month, making it a natural moment to pause and evaluate your overall money strategy. One area that often slips under the radar is life insurance. While many people think of it as something meant for later in life, it can actually be an important foundation for financial stability at every age.

Life insurance can help safeguard your loved ones, prepare your family for unexpected events, and in some cases, even support your own financial goals while you’re still here. Below, we’ll walk through what life insurance really does, the most common types of policies, and how to make sure your coverage still fits your current needs.

What life insurance actually accomplishes

At its simplest, life insurance provides a payout—called a death benefit—to the beneficiaries you choose if you pass away. This money can be used for a wide variety of expenses, including day-to-day bills, funeral costs, rent or mortgage payments, outstanding debts, or child care responsibilities.

Essentially, life insurance helps your family maintain their financial footing during a difficult time. It creates immediate cash when it’s needed most and helps relieve the financial pressure that can come with an unexpected loss.

To keep your policy active, you pay premiums on a regular schedule. In exchange, the insurer guarantees a payout under the terms of your contract. That assurance is one of the big reasons life insurance is such an important part of a healthy financial plan.

Understanding term vs. permanent life insurance

Life insurance generally falls into two main categories: term and permanent. Each type serves different needs, and the best fit for you depends on your financial goals, your budget, and your stage of life.

Term life insurance covers you for a specific period—commonly 10, 20, or 30 years. If you pass away during that timeframe, the policy pays out to your beneficiaries. If you live beyond the term, the coverage ends. Term life is usually more affordable and is often a good match for people who want protection during high‑responsibility years, such as raising children or paying off a mortgage.

Permanent life insurance, however, lasts your entire lifetime as long as premiums continue to be paid. These policies also include a savings component known as cash value, which grows over time. You may be able to borrow against this balance or withdraw a portion while you’re alive, though doing so can reduce the death benefit.

Two of the most common kinds of permanent life insurance are:

Whole life insurance

This type offers guaranteed cash value growth, fixed premiums, and a guaranteed death benefit. It’s a stable, predictable option for long‑term planning.

Universal life insurance

Universal life policies provide more flexibility. You can adjust your premiums or death benefit, and the cash value typically grows based on market performance. This means it offers more control but can also carry more risk depending on how the market behaves.

Both types can be helpful if you prefer lifelong protection or like the idea of having an additional savings feature built into your coverage.

Deciding whether cash value fits your needs

The cash value portion of permanent life insurance is often viewed as a useful extra. Over the years, it can be tapped to help with major expenses such as medical bills, educational costs, or supplementing retirement income.

However, it’s important to understand how this feature works. Cash value usually grows slowly in the early years of the policy, and borrowing or withdrawing from it can reduce the amount your beneficiaries receive. Permanent policies also tend to cost more than term coverage.

If you already need lifelong protection or want level premiums, the cash value component can be a helpful bonus. Still, most people should ensure they are contributing adequately to other savings or retirement plans before relying on a life insurance policy for investment purposes.

Optional riders that customize your coverage

Life insurance isn’t meant to be one‑size‑fits‑all, which is where riders come into play. These optional add‑ons allow you to tailor your policy to better match your specific needs.

For example, a long‑term care rider may help pay for ongoing assistance if you develop a serious illness or injury. A terminal illness rider gives you access to a portion of your death benefit if you’re diagnosed with a terminal condition. For term policies, a return‑of‑premium rider may refund the premiums you paid if you outlive your coverage period.

Some term policies also include a conversion feature, which allows you to switch to permanent insurance later without undergoing another medical exam. This is especially helpful if your health changes over time and makes qualifying for a new policy more difficult.

Riders can add flexibility, enhance protection, and help ensure your policy grows with you through different stages of life.

How to keep your life insurance current

Keeping your life insurance updated is an important piece of maintaining financial wellness. Here are a few simple steps that can help you stay on track:

Start by reviewing your beneficiaries annually. Life changes quickly, and major events like marriage, divorce, or the birth of a child may require updates. Then, check whether your coverage amount still reflects your current obligations. Changes in income, debt, or family size can influence how much protection you need.

If you have a term policy, revisit whether it includes a conversion option. Switching to permanent life insurance later—especially without a new medical exam—can be valuable if your long‑term needs shift.

Finally, try reviewing your policy once a year, just like you would with your budget or savings plan. A quick check‑in can make sure everything continues to support your financial goals.

If you’d like help comparing policies or reviewing your current coverage, reach out anytime. We’re here to help you protect what matters most.