Contributing columnist John Perry mentions that individuals procrastinate in buying insurance.
Insurance publications indicate that 45 percent of Americans do not own their own coverage. Justifications for lacking adequate insurance run from not being able to afford it to being in denial about death.
The four points Perry made about life insurance require clarification:
■"You should buy life insurance and not be sold it."
For people between ages 20 and 50, the general attitude is that buying life insurance online or through ads is better than talking to an agent because an agent just wants to make a sale. However, in many instances, such purchases result in insufficient insurance, improper beneficiaries and, in some cases, incorrect ownership.
■ "You should buy term insurance and not whole-life or any of its relatives."
There is not enough space here to provide a full explanation, but it is well known that term insurance is bought for a temporary need; whole life is bought for a permanent need.
Examples of term-insurance priorities are to cover debts, such as a mortgage; make sure children have money to attend college; or when one cannot afford the cost of permanent coverage.
Whole-life and its cousins are required for a permanent need: fund a business agreement, provide estate liquidity, provide capital to take care of a "special needs" situation or as a savings method. A professional life-insurance agent can provide the correct advice for the proper type of insurance.
■ Buy enough life insurance to equal eight to 12 times one's yearly income. That would be great, but that advice is too broad. Have enough to make sure all debts are paid off and to adequately fill the financial needs of spouses and children for a certain period of time.
A professional insurance agent would integrate life-insurance needs with Social Security, retirement benefits, cash and other investments, such as business ownership, stocks and bonds.
■ Buy enough insurance to take care of dependents. One needs sufficient assets to not just care for dependents but also to maintain their lifestyles.
Here's my advice: If you want to buy life insurance, find an agent you can trust, and that might be decided by a gut feeling. The agent should be a Chartered Life Underwriter or a Chartered Life Consultant or have obtained some other industry designation. Typically, it's a good sign if an agent has been in the business 20 or 30 years.
The cost of life insurance is important, but it changes every day. Find a company with at least a Best-A rating or above and an agent who will put your interests first.