Financial expert talks about importance of life insurance

WAFF 48's Sean Dowling reports.
Published: May. 24, 2023 at 9:57 AM CDT
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HUNTSVILLE, Ala. (WAFF) - From financial security to helping pay off debts, having life insurance can make all the difference for your family should something happen to you.

Welath management expert, Marshall Clay from The Welch Group elaborated on the importance and nuances of having life insurance. “When we’re thinking about life insurance, we’re trying to transfer the potential risk of a loss of income from a family to an insurance company,” Clay said. The financial expert says it’s all about risk management, and there are a few ways to make sure your family is protected.

By this, he means the different types of policies. Types include term, permanent and group. “For most people, term policies are going to be the way to go. They’re the cheapest and most inexpensive,” Clay said.

The certified financial planner explains in a nutshell that the goal is to buy yourself some time between the time that you get the insurance, and when you can accumulate enough assets where you really don’t need the life insurance anymore.

He then explains typical coverage terms. “Term policy is typically going to cover you for 10, 20, sometimes even 30 years. And so the assumption is that you’re accumulating some wealth along the way,” Clay said.

When the term policies expire, he says that’s when you don’t need the insurance anymore.

Then, there’s permanent life insurance, and Clay explains the biggest difference is the cost. “Permanent life insurance is a little bit more expensive because the insurance company is going to have to pay that death benefit as long as you, as the insured individual pays off or pays that premium,” Clay said.

Many companies offer term policies through work, but Clay explains there are things to know if you get coverage through an employer versus private insurance. “There’s some risk in that the insurance is only going to stay in force as long as you’re the employee there,” Clay said.

The wealth management expert goes on to say there are cases where the employer will allow an individual to carry the insurance, but he explains it’s a smart move to establish some type of private insurance.

He also explains that life insurance typically is not taxable, and recommends to his clients it’s always better to be over-insured than under-insured.

For more ways to stay financially savvy, visit The Welch Group’s website.

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