Why Life Insurance Supports Long-Term Financial Wellbeing

January’s focus on Financial Wellness Month makes it an ideal moment to step back and assess the strength of your overall financial strategy. While budgeting, saving, and investing usually get the most attention, life insurance is another essential piece of the puzzle that many people overlook. Even though it’s often associated with later stages of life, life insurance can play a meaningful role in your financial stability today and in the years ahead.

A well-designed life insurance plan can help safeguard the people you care about, provide stability when unexpected events arise, and, in some cases, offer financial advantages you can use while you’re still living. Below, we’ll walk through the fundamentals, the types of coverage available, and the steps you can take to ensure your policy continues to meet your needs.

Understanding What Life Insurance Actually Does

At its simplest, life insurance delivers a payout—known as the death benefit—to the individuals you’ve chosen if you pass away. These funds can help cover essential expenses, such as mortgage payments, rent, medical bills, childcare, funeral costs, or everyday living needs.

Ultimately, life insurance is designed to help your family stay on solid financial ground during a difficult time. It provides accessible cash right when it’s needed most and helps reduce the stress of a worst-case scenario.

To keep your coverage active, you make regular premium payments. In return, the insurer guarantees the benefit outlined in your policy. That assurance alone is why many people view life insurance as a cornerstone of financial wellness.

How Term and Permanent Life Insurance Differ

Most life insurance options fall into one of two categories: term or permanent. Each type serves a unique purpose, and the best fit depends on your goals, financial situation, and the stage of life you’re in.

Term life insurance covers you for a specific period—often 10, 20, or 30 years. If you pass away during the policy’s term, your beneficiaries receive the death benefit. If the term expires before that happens, the coverage ends. Term life is typically more budget-friendly and is ideal for covering high-demand phases of life, such as raising a family or managing a mortgage.

Permanent life insurance lasts your entire lifetime, as long as you maintain premium payments. It also includes a valuable feature called cash value, which grows gradually over time. You can tap into this cash value through loans or withdrawals while you’re alive, though doing so may reduce the final death benefit.

There are two commonly used versions of permanent life insurance:

• Whole life insurance: Offers consistent premiums, steady cash value growth, and a guaranteed death benefit. It’s a stable, predictable option.
• Universal life insurance: Features more flexibility, allowing you to adjust your premiums and death benefit. Cash value growth depends on market performance, which means it can fluctuate but also gives you more long-term control.

Both types of permanent coverage can be helpful in long-term planning, especially if you want lifelong protection or appreciate having a built-in savings component.

Should You Consider Cash Value?

The cash value included in permanent life insurance is often viewed as a helpful extra. Over time, it can be used to support large financial needs, such as education expenses, medical costs, or supplementing retirement income.

However, it’s important to understand how cash value works. It typically grows slowly in the early years, and borrowing or withdrawing funds can reduce what your beneficiaries ultimately receive. Permanent life insurance is also more expensive than term coverage because of the added features.

If you already need lifetime protection or prefer predictable long-term premiums, cash value can be a useful benefit. But for many households, it’s wise to prioritize other savings or retirement accounts first before relying on life insurance as an investment tool.

Optional Features That Enhance Your Policy

Life insurance doesn’t have to be one-size-fits-all. Riders—additional features you can add to a policy—allow you to tailor your coverage based on your needs.

Some helpful rider options include:

• Long-term care rider: Helps cover the cost of care if you become seriously ill or need assistance with daily activities.
• Terminal illness rider: Allows you to access part of your death benefit early if you’re diagnosed with a qualifying medical condition.
• Return of premium rider (for term policies): Gives you the chance to receive some or all of your premiums back if you outlive your policy’s term.

Additionally, many term policies include a conversion option. This lets you switch to permanent coverage later without undergoing another medical exam. It can be especially valuable if your health changes over time.

These enhancements can make your policy more flexible, more personalized, and better equipped to support your long-term goals.

Simple Habits to Keep Your Policy Current

Maintaining up-to-date life insurance is an important part of staying financially healthy. Here are a few ways to keep your policy aligned with your life:

• Review your beneficiaries annually: Check for needed updates after major life events such as marriage, divorce, or the birth of a child.
• Reevaluate your coverage amount: If your financial responsibilities or income have changed, your policy may need to be adjusted.
• Look at your term conversion options: If you have term insurance, understand whether it allows you to convert to permanent coverage without another medical exam.
• Schedule a yearly policy review: Treat it like reviewing your budget—quick, simple, and incredibly valuable.

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