Buying Life Insurance
Kevin McClintock GateHouse Plus

Insurance isn't tangible, despite its high price tag. In other words, you can't eat insurance. It won't take you across town. It won't keep you warm at nights, and you certainly can't stand in front of it and use it to watch sporting events or play video games. But make no mistake about it - you can't live without insurance. It is, said insurance agent Karen Rutledge, "a necessary evil."

That's because insurance, primarily life insurance, is one of those extremely rare products where individuals or couples fork over good money on a monthly basis for years and years, and pray they never have to use it. For if they do have to use life insurance, it likely means a loved one's been hurt.

"We help give (people) security about some of the most important things in their lives, the type of things they spend most of their money on, like a house or vehicles or (life) insurance," Rutledge said. "Those are things critical to people, and most of us can't have enough money put back to take care of a totaled car or burned house or untimely death. So we'll help take care of the most important items in their lives. It's a needed service in society, and one that bears a heavy responsibility."

Life insurance is something most folk's hope they never used. As the name implies, it can play a role not only with young members of a family, but parents and guardians, as well.

Why purchase life insurance? Well, the main reason is to put some worth on one's life. This worth would then be passed on to surviving family members should the insurer die, either naturally or otherwise. In other words, if a life insurance earner dies, the coverage enables the survivors to go on without having to make any financial sacrifices.

And there are decisions to make. How much should be purchased? What type of coverage should be purchased? And which from the potentially hundreds of life insurance companies does a person choose from?

Well, in most cases, there really isn't any life insurance needed if a person doesn't have kids or enough money to pay final expenses. For the majority however, one advice columnist recommended a person should purchase insurance equal to 20 times an individual's salary, pre-taxes. If the benefit were invested in bonds that pay 5 percent interest, it would produce an amount equal to the salary at death. Thus, the surviving family members can live off the interest and wouldn't have to "invade" the principal.

There are two kinds of life insurance - "term" and "whole life." In 2003, about 6.4 million individual life insurance policies purchased were term, and about 7.1 million were whole life, according to the Insurance Information Institute.

Term is the simplest form, and pays only if death occurs during the term of the policy, which can range from a single year, up to 30 years. The whole life form pays a death benefit whenever the insured dies.

Also remember that life insurance can be purchased either as an "individual" or as part of a "group" plan. The latter is usually purchased from a large company employer.

According to the Insurance Information Institute, "Choosing beneficiaries, and keeping those choices up-to-date, is an important part of owning life insurance. The birth or adoption of a child, marriage or divorce can affect your initial choice. Review your beneficiary designation as new situations arise in order to make sure your choice is still appropriate."