Bruce Weiner
January marks Financial Wellness Month, making it an ideal moment to revisit your overall financial strategy. While many people focus on budgeting, saving, or paying down debt, one essential element often slips through the cracks: life insurance. Although it’s commonly viewed as something you only need later in adulthood, life insurance can strengthen your financial foundation at every stage of life.
Life insurance not only supports those you care about during difficult times but can also help stabilize your long‑term financial picture. In some cases, it can even contribute to your own goals while you're still alive. Below, we’ll break down how life insurance works, explore the different types available, and review how to make sure your policy continues to meet your needs.
What Life Insurance Really Does
At its simplest, life insurance provides a payment—known as a death benefit—to the people you designate if you pass away. Your beneficiaries can use those funds for major costs like mortgage or rent payments, funeral expenses, credit card balances, or everyday living needs.
In other words, life insurance acts as a safeguard for your family’s financial stability. It offers immediate access to cash at a time when it’s needed most and brings clarity to an otherwise uncertain situation.
To keep a policy active, you pay regular premiums. In exchange, the insurance company promises to deliver the payout according to your contract. That assurance is a big part of why life insurance is considered a cornerstone of long‑term financial wellness.
The Difference Between Term and Permanent Life Insurance
Life insurance generally falls into two categories: term and permanent. Each type supports different goals and situations, so understanding the distinction can help you choose the right fit.
Term life insurance
offers protection for a specific period—typically 10, 20, or 30 years. If you pass away within that timeframe, your beneficiaries receive the death benefit. If not, the policy expires. Term insurance is typically the more affordable option and is a strong choice for covering responsibilities during key life chapters, such as raising children or paying off a mortgage.
Permanent life insurance
provides lifetime coverage as long as premiums are paid. These policies also include a built‑in savings feature known as cash value, which accumulates gradually over time. You can access this money through loans or withdrawals, though doing so may lower the future death benefit.
Two popular forms of permanent coverage include:
- Whole life insurance: Offers consistent premiums, guaranteed cash value growth, and a guaranteed death benefit. It’s ideal for those who prefer predictability and stability.
- Universal life insurance: Provides adjustable premiums and death benefits, with cash value tied to market performance. While it offers greater flexibility, it can also carry additional risk depending on economic conditions.
Permanent options can be useful if you want lifelong coverage or like the idea of combining insurance with a savings component.
Is Cash Value a Good Fit for You?
The cash value portion of permanent life insurance is often viewed as an attractive feature. Over many years, it can grow into a helpful pool of money that you might use for college costs, medical expenses, or even retirement planning.
However, expectations should be realistic. Cash value builds slowly in the early years, and accessing it through loans or withdrawals may reduce what your beneficiaries ultimately receive. Permanent policies also cost more than term coverage.
If you already know you want lifelong insurance or prefer steady premiums, cash value can be a valuable bonus. Still, most people should make sure they’ve covered the basics—like emergency savings or retirement contributions—before relying on a life insurance policy as an investment tool.
Boosting Your Policy With Add‑Ons
Life insurance isn’t a one‑size‑fits‑all product. That’s where riders—optional policy features—come into play. Riders allow you to tailor your policy to better match your personal needs.
- Long‑term care riders can help pay for services if you become seriously ill or unable to complete daily tasks on your own.
- Terminal illness riders allow you to receive part of your death benefit early if you face a terminal diagnosis.
- Return‑of‑premium riders on term policies may refund the premiums you paid if you outlive the term period.
- Conversion options let you switch your term coverage to permanent insurance later—often without a new medical exam—which can be especially useful if your health changes.
These add‑ons can make your coverage more flexible and better aligned with your long‑term plans.
How to Keep Your Life Insurance Up to Date
Just like reviewing your budget or savings plan, checking in on your life insurance regularly is part of staying financially healthy. A few simple habits can help ensure your coverage continues to work for you:
- Review beneficiaries annually. Life changes—marriage, divorce, new children—should prompt an update to who receives your benefits.
- Reevaluate your coverage amount. If your income, debt, or family responsibilities change, your policy should reflect those shifts.
- Check for conversion options. Term policyholders should understand whether and when they can convert to permanent insurance.
- Schedule a yearly policy review. A quick check‑in helps keep everything aligned with your overall financial goals.
If you’d like help reviewing your current policy or exploring new options, reach out anytime. We’re here to support you in protecting what matters most.