A Fresh Look at Financial Wellness

January marks Financial Wellness Month, making it an ideal moment to reevaluate the plans you’ve set for your financial future. While budgeting, saving, and investing often take center stage, life insurance is one component that’s easy to overlook. In reality, it can be a foundational part of your long-term financial wellbeing—no matter your age or stage of life.

Life insurance offers far more than a safety net for later in life. It supports your loved ones, prepares your household for unpredictable situations, and in certain cases, provides benefits you can use while you’re still living. Below, we’ll explore what life insurance does, the different types of coverage available, and how to ensure your policy continues to align with your needs.

The Purpose of Life Insurance

At its simplest, life insurance delivers a payout—known as a death benefit—to the people you designate if you pass away. This money can help shoulder significant financial responsibilities such as mortgage or rent payments, personal loans, funeral costs, child care, or everyday bills that don’t stop in difficult times.

Think of it as a way to keep your family’s financial momentum going even if you’re no longer there to support them. It provides immediate liquidity when it’s needed most and helps turn a challenging “what happens if?” scenario into one your loved ones can navigate with more stability.

To maintain coverage, you pay regular premiums. In exchange, the insurance company guarantees the death benefit as outlined in your policy. That dependable protection is one of the reasons life insurance remains a core element of a solid financial plan.

Term vs. Permanent Life Insurance

Life insurance typically falls into two broad categories: term insurance and permanent insurance. Each type serves a different purpose, so your best fit depends on your financial goals, your budget, and the stage of life you’re in.

Term Life Insurance

Term coverage lasts for a specific timeframe, often 10, 20, or 30 years. If you were to pass away within that window, your beneficiaries would receive the death benefit. Once the term ends, the policy expires unless renewed. Term coverage is usually the most affordable option and works well for individuals who want protection during years of increased responsibilities—such as raising children, paying for college, or managing major debts.

Permanent Life Insurance

Permanent life insurance, by contrast, remains active for your entire lifetime as long as premiums are paid. One defining feature is its cash value component, which grows over time. This savings-like portion can be accessed while you're living, though withdrawals or loans may reduce the final payout.

Permanent coverage is commonly available in two forms:

• Whole life insurance: Offers consistent premiums, guaranteed cash value growth, and a guaranteed death benefit. It provides stability and predictable results.
• Universal life insurance: Allows flexibility in payments and death benefit levels. Its cash value typically depends on market returns, giving policyholders more control but also more variability.

Many people choose permanent coverage for lifelong protection or because they appreciate the built-in cash value benefit. However, the right option varies based on your financial priorities and long-term outlook.

Understanding Cash Value

The cash value portion of a permanent policy can be appealing, especially as it grows over time. Some people use it to help cover large expenses such as education costs, unexpected medical bills, or even supplemental retirement income.

Still, it’s important to understand how this feature works. Cash value typically grows slowly, particularly during the early years of the policy. Taking loans or withdrawals may reduce the total your beneficiaries receive later. Additionally, permanent life insurance generally costs more than term coverage.

If you already know you want coverage that lasts a lifetime or prefer level premiums, cash value can be a meaningful bonus. But it’s wise to make sure your other savings and retirement accounts are funded before relying on a life insurance policy for investment purposes.

Riders That Customize Your Policy

Life insurance isn’t meant to be one-size-fits-all. Riders—optional add-ons—allow you to tailor a policy so it better suits your needs and priorities.

Common riders include:

• Long-term care rider: Helps cover care costs if you develop a chronic illness or disability that requires ongoing support.
• Terminal illness rider: Lets you access part of your death benefit early if you’re diagnosed with a terminal condition.
• Return of premium rider: Available on certain term policies, this rider refunds your premiums if you outlive your policy term.

Some term policies also include a conversion feature, giving you the option to switch to permanent coverage later on without completing a new medical exam. This can be especially valuable if your health changes, making new coverage harder to qualify for.

Simple Ways to Keep Your Policy Current

Regularly reviewing your life insurance ensures that it continues to support your overall financial wellbeing. A few habits can help keep your coverage aligned with your circumstances:

• Review beneficiaries annually: Update names after major life events like marriage, divorce, or the birth of a child.
• Reevaluate your coverage amount: Life changes—such as a new home, higher income, or growing family—may require adjustments to your policy.
• Check term policy conversion options: If your term policy allows conversion to permanent coverage, review the deadlines and requirements.
• Schedule a yearly policy check-in: Much like reviewing your budget, setting aside time once a year to look over your coverage helps keep you on track.

If you’d like help reviewing your current life insurance or exploring whether your policy still meets your needs, reach out anytime. We’re here to support you in protecting the people and priorities that matter most.