Life Insurance is something we usually start thinking about when we have dependents. Life Insurance falls into two broad categories- term and whole life. Term insurance is insurance without any investment, and lasts as long as you pay your monthly premium. Whole life has an added investment component that accumulates tax-free, and is paid out on your death.

Of the two options, whole life is more expensive for several reasons. Because insurance agents get much larger commissions when they sell whole life coverage as compared to term life, they will always try and convince you of the benefits of whole life. What they dont tell you is that their commissions are built into your premium, and that you may stand to lose all your money if you want to cancel your whole life policy. A good rule of thumb is to keep insurance separate from investments; you can usually get better returns on your investments elsewhere. And for tax breaks, 401(k)s and IRAs carry lower commissions and provide better yields.

When you get Life Insurance, ensure you are adequately covered to meet your dependents needs. Interest rates are low at present, so you should be able to get all the coverage you need while paying a fairly low premium. A rough guide is to get coverage for at least five to seven times your current gross annual income; however, some insurance is better than none. You dont necessarily need to be insured for the rest of your life; you need Life Insurance for as long as you have dependents. To get a better rate, you can factor in the time until you expect your children will become financially independent, or you start receiving your retirement benefits. As with any other type of insurance coverage, shop around to get the best deal.