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Smart shopping for life insurance

Life insurance is something that most people, and practically all families, need. It's a good idea to review your policies with your insurance agent every year, or whenever a big event happens in your life-a home purchase, a marriage, a new child or newly dependent older relative.

There are two basic types of life insurance.

Term life insurance is an affordable option for those who are on a limited budget. This is "temporary" insurance that provides coverage for a specific amount of time (usually one to 30 years). Premiums are initially lower at a younger age and increase at renewal as one gets older. Term policies provide a death benefit, but do not build cash value. Most term policies can be converted to permanent insurance for a higher premium.

Permanent life insurance offers lifetime protection as long as your premiums are paid. At younger ages, permanent insurance is more expensive than term; however, premiums do not increase as one gets older. Permanent life insurance policies build cash value that can be borrowed or used to pay premiums. Whole, ordinary, universal and variable life insurance policies are all types of permanent life insurance.

Whatever the type, the ideal amount of life insurance coverage depends on a family's specific needs and financial situation. Generally, it should be enough to:

Cover final expenses, including funeral costs, medical expenses, estate taxes and attorney fees.
Pay off debts to ensure that surviving loved ones are not left with an overwhelming financial burden.
Provide for lost income to cover continuing household expenses such as monthly bills and child care.
Provide money for future needs, such as college tuition for children or retirement for a surviving spouse.

If it's been a long time since you looked at your life insurance policies, don't wait any longer. It's never too soon to protect your family's future.