Why Life Insurance Is an Essential Part of Your Financial Health

January marks Financial Wellness Month, which makes it a great time to revisit your overall financial picture. While budgeting, saving, and investing often get the most attention, there’s another key piece that many people tend to overlook—life insurance. Although it’s often associated with older adults or major life milestones, life insurance can actually support your financial well‑being at every stage of life.

Life insurance provides a layer of protection for the people you care about, helps prepare your household for unexpected events, and in some cases, can even contribute to your long‑term financial goals. Below, we’ll walk through what life insurance does, the different types of coverage available, and how to make sure your policy still fits your needs over time.

What Life Insurance Really Does

At its foundation, life insurance offers a payout—known as a death benefit—to the beneficiaries you designate. This payout can help cover essential expenses such as housing costs, outstanding debts, funeral arrangements, childcare needs, or day‑to‑day living costs.

In simple terms, life insurance helps keep your family’s financial life on track if you aren’t there to provide support. It offers much‑needed liquidity during difficult moments and helps transform an overwhelming “what now?” into a more manageable situation.

To maintain your coverage, you’ll make regular premium payments. In exchange, the insurance company promises to deliver the death benefit under the conditions of your policy. That assurance alone is one of the major reasons life insurance is considered an important part of a strong financial foundation.

The Difference Between Term and Permanent Life Insurance

Life insurance comes in two main forms: term and permanent. Each type plays a different role depending on your goals, budget, and stage of life.

Term life insurance offers coverage for a set number of years—typically 10, 20, or 30. If you pass away during the selected timeframe, your beneficiaries receive the death benefit. If the term ends while you’re still living, the policy simply expires. Term coverage is generally more affordable and tends to be a practical option during high‑responsibility years, such as raising children or paying down a mortgage.

Permanent life insurance provides lifelong protection as long as premiums are paid. These policies also include a cash value component that grows over time. You can borrow against or withdraw from this cash value while you’re alive, but doing so may reduce the future death benefit.

Two common types of permanent life insurance include:

• Whole life insurance: This option offers fixed premiums, guaranteed cash value growth, and a guaranteed death benefit. It’s steady, predictable, and easy to plan around.
• Universal life insurance: This type offers more flexibility. You can adjust your premiums and death benefit, and the cash value growth depends on market conditions. While it may involve more risk, it also provides more control.

Both types can be useful for long‑term financial planning, especially if you want lifelong coverage or appreciate having a built‑in savings feature.

Is Cash Value Right for You?

The cash value portion of permanent life insurance is often viewed as an added perk. Over time, this savings component may help with major expenses such as education costs, medical needs, or even retirement planning.

However, it’s important to know what to expect. Cash value takes time to build, and borrowing or withdrawing from it may reduce the death benefit your loved ones eventually receive. Permanent policies are also more expensive than term insurance.

If you already need lifelong coverage or like the stability of fixed premiums, a cash value policy might be a good fit. But most people should ensure they’re contributing fully to other retirement and savings vehicles before relying on a life insurance policy for investment growth.

Add-Ons That Boost Your Coverage

Life insurance can be customized, and that’s where riders come in. Riders allow you to tailor your policy with added features that suit your unique circumstances.

Some examples include:

• Long-term care rider: Helps offset the cost of care if you develop a serious illness or injury that limits your ability to live independently.
• Accelerated death benefit rider: Allows you to access a portion of your death benefit early if you’re diagnosed with a terminal condition.
• Return-of-premium rider: For term policies, this feature refunds your premiums if you outlive your policy period.
• Conversion option: Many term policies allow you to convert your coverage into permanent insurance without additional medical exams—a valuable benefit if your health changes.

These optional add‑ons can improve flexibility, enhance protection, and ensure your coverage evolves as your life does.

Simple Ways to Keep Your Coverage Up to Date

Maintaining your life insurance is a key part of staying financially healthy. A few quick annual habits can help make sure your coverage still aligns with your current needs:

• Review your beneficiaries: Check who you’ve listed at least once a year, especially after major life events such as marriage, divorce, or welcoming a new child.
• Reassess your coverage amount: If your income, expenses, or family responsibilities have changed, you may need more—or in some cases, less—coverage.
• Look into conversion options: If you have term insurance, confirm whether you can convert it to permanent coverage later. This can be reassuring if your health situation shifts.
• Schedule a yearly policy review: Like checking your budget or updating your savings plan, a quick policy check can help keep everything running smoothly.

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