January marks Financial Wellness Month, making it an ideal moment to step back and review how well your financial plan aligns with your current life. One area that often doesn’t get enough attention is life insurance. Many people think of it as something to consider only later in life, but it can actually be a meaningful part of your financial foundation at every stage.

Life insurance can help secure your family’s future, cushion them from unexpected changes, and in some cases, even support your personal financial goals while you’re still here to enjoy the benefits. Below, we’ll walk through what life insurance really does, the major types of coverage you can choose from, and how to keep your policy aligned with your needs over time.

What Life Insurance Actually Does

At its simplest, life insurance provides a payout—known as a death benefit—to the people you designate if you pass away. Your beneficiaries can use this money in any way they need, whether it’s covering a mortgage payment, handling child care costs, paying down debts, or managing everyday living expenses.

Think of life insurance as a financial safety net. If something unexpected happens, it helps your loved ones stay on track rather than facing heavy financial pressure during an already difficult time. That instant access to funds provides liquidity at a moment when it matters most.

In exchange for paying regular premiums, your insurer guarantees this benefit according to the terms of your policy. That assurance alone can bring peace of mind and is one of the reasons life insurance is often considered a key component of long-term financial health.

Understanding Term vs. Permanent Life Insurance

Life insurance generally falls into two categories: term and permanent. Each serves a different purpose, and the right choice depends on your budget, goals, and family situation.

Term life insurance covers you for a set period—commonly 10, 20, or 30 years. If you pass away during the term, your beneficiaries receive the death benefit. If the term ends while you’re still living, the policy expires. Term life is typically more affordable and ideal for covering financial responsibilities that have an end date, such as raising kids, paying off a home, or replacing income during your working years.

Permanent life insurance provides lifelong protection as long as premiums are paid. These policies also build cash value over time, which functions like a small savings component inside the policy. You can borrow from or withdraw part of this cash value while you’re alive, but doing so may reduce the amount your beneficiaries ultimately receive.

Two main types of permanent life insurance are commonly available:

Whole life insurance comes with fixed premiums, predictable growth in cash value, and a guaranteed death benefit. It’s steady, reliable, and designed to remain consistent throughout your life.

Universal life insurance offers greater flexibility. You can adjust your premium payments and even modify the death benefit, within certain limits. The cash value in these policies may grow based on market performance, which means it may fluctuate over time.

Both permanent options can be helpful if you want lifelong protection or are drawn to policies that include a built-in savings element.

Is Cash Value a Good Fit for Your Financial Plan?

Cash value is often viewed as one of the attractive features of permanent life insurance. Over many years, it may accumulate to an amount you can use for various purposes, like supplementing retirement income or handling major expenses.

However, it’s important to understand how it works. Cash value typically grows slowly in the early years of a policy, and accessing it through withdrawals or loans can affect the payout your loved ones receive later. Permanent coverage also tends to cost more than term insurance.

If you already need insurance that lasts your entire lifetime or want predictable premiums, the cash value component may be a helpful bonus. But for most people, it makes sense to build up other savings and retirement accounts first before relying on life insurance as an investment tool.

Helpful Add‑Ons You Can Add to Your Policy

Life insurance can often be tailored to your situation through riders—optional features that add more flexibility or protection to your policy.

For instance, a long‑term care rider can help pay for support if you become seriously ill or injured and need ongoing assistance. A terminal illness rider may let you access part of your death benefit early if you receive a qualifying diagnosis. If you choose term insurance, a return‑of‑premium rider could refund your premiums if you outlive the policy.

Many term policies also offer the ability to convert to permanent insurance later without going through another medical exam. This can be especially valuable if your health changes over time and getting a new policy becomes more challenging.

Simple Habits to Keep Your Coverage Up to Date

Just like other parts of your financial life, life insurance needs a periodic check‑in to make sure it still reflects your circumstances.

Start by reviewing your beneficiaries once a year. Life changes—such as getting married, divorced, or welcoming a child—can affect who you want listed.

Next, confirm that your coverage amount still fits. If your income has grown, your debts have changed, or your family has expanded, it may be time for an adjustment.

If you have a term policy, see whether conversion is an option. Even if you don’t plan to switch now, knowing the deadline can be helpful.

Finally, consider adding your life insurance policy to your annual financial review. A quick check can help keep everything aligned with your goals and give you confidence that your loved ones are protected.

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