While you should enjoy everything life offers, planning for what happens when you die matters. If dependents rely on your income, you probably need life insurance. Choosing the right policy for your family can be challenging. If you are unsure where to begin, you are in the right place. 

This buying guide covers life insurance types, calculating coverage needs, and comparing companies. We will also provide an overview of our favorite life insurance providers so you can choose the best insurance for your needs. 

Types of life insurance

Before choosing a policy, identify the insurance type you need. There are two broad categories: term and permanent.

Term life insurance

Term life provides temporary coverage for a fixed period, usually 10 to 30 years. If you die while the policy is in force, beneficiaries receive a payout. If you outlive it, you receive nothing from the insurer unless you have a return-of-premium policy. 

Term life is designed to provide money to dependents when they need it most: during your income-earning, child-raising, college-saving, and mortgage-paying years. Although it does not provide a permanent death benefit, it meets most people's needs and costs significantly less than permanent insurance. 

Rates vary by age, sex, health, policy options, and other factors, but our research found that a healthy 30-year-old would pay an average of around $25 monthly for a 30-year policy with a $500,000 benefit. 

Permanent life insurance

Unlike term coverage, permanent life is designed to last your entire life and pay beneficiaries regardless of when you die, provided premiums are paid. There are several types, most including cash value that can be withdrawn or borrowed while alive.

• Whole life insurance: Has fixed premiums and a guaranteed death benefit. It can cost up to 10 times the premium of term coverage with the same death benefit. It best suits people with lifelong dependents or estate planning needs. 
• Universal life insurance: Offers flexible premiums, an adjustable death benefit, and interest-earning cash value.
  It resembles whole life but has fewer guarantees and suits people needing greater flexibility. Variable and indexed life are usually universal life types. With both, cash value fluctuates based on market performance. 
• Final expense insurance: Also called burial insurance, this is whole life with a small death benefit, usually $40,000 or less. It is designed for older adults with health problems and requires no medical exam. 

How to choose the best life insurance policy

To choose the best insurer, first determine your needs. Then narrow the field to companies offering the coverage you want. 

Determine what you need

• How much coverage do you need?
  Start with the income you provide dependents, including workplace benefits and services they would need to replace. Multiply by the years coverage is needed, adjust for inflation, and subtract expected Social Security benefits.
  Add money for children's college needs or your spouse's retirement as you consider appropriate.
  
• How long do you need coverage?
  Plan for coverage until retirement, until debts are paid and sufficient savings support the family, or until dependents become self-sufficient.
  
• How much life insurance can you afford?
  You may need to trim other budget areas to afford coverage meeting your needs, or compromise on policy type. Examine other expenses and determine what is feasible monthly.
  If you want permanent coverage, consider supplementing it with term insurance to obtain the death benefit needed at an affordable price.
  
• Which riders or policy features matter to you? Riders provide additional benefits. Some allow access to part of the death benefit while alive for health-related expenses. Others allow premium payments to stop if you become disabled. When buying term insurance, decide whether you want a conversion option to permanent coverage. Some riders may be included; others cost extra. 

Compare life insurance companies

• Check financial strength: To ensure the insurer is financially stable enough to pay a future death benefit, consider ratings from independent agencies such as AM Best.
  
   
• Review customer complaints: Check each company's National Association of Insurance Commissioners (NAIC) complaint index, which shows whether complaints are above or below average compared with other insurers. An index below 1.00 is ideal; lower is better. Reviews on third-party sites such as Trustpilot can also reveal complaint patterns.
  
  
• Assess customer satisfaction: Check the company's ranking in the latest J.D. Power U.S. Individual Life Insurance Study, which measures satisfaction across several areas. 
• Consider available policy types: Narrow your choices to companies offering the type and amount of coverage you need.

• Consider riders: Once you identify needed riders, compare their costs at each company and whether any are included without an initial charge. 
• 
  Consider the application process: Many companies issue same-day policies without an exam, especially term and final expense coverage. But taking an exam may benefit you if you are healthy.
  
  Life insurance costs depend heavily on health, and a no-exam policy may not qualify you for the best health classification.
• Get life insurance quotes: Gather quotes from a handful of providers. 
• Start with online quotes where available, use an insurance comparison website, or call an insurance broker. 
• Read the fine print: Before paying the first premium, understand policy details and exclusions. 
• Know the free-look period: Insurers must give new policyowners a free-look period to review details and cancel for a full refund, no questions asked. 
• Its length varies by state but is typically at least 10 days.

Consult a financial adviser

If life insurance options are confusing, speak with a financial adviser or independent life insurance agent for help navigating the complexity of selecting permanent coverage. 

This is probably unnecessary if you are young, healthy, and want term insurance. But if you have lifelong dependents and need permanent coverage, require estate planning help, or have health problems and worry about being declined, a financial adviser can help. 

If retirement planning or other investments also concern you, an adviser can help you understand your overall financial picture.

If you are beginning to learn life insurance terminology, this information may be useful

What is life insurance?

Life insurance is a contract with an insurer providing a lump-sum payment to beneficiaries you choose if you die.

 The policy must be in force at death for the insurer to pay. Life insurance comes in term and permanent forms. It can sometimes supplement retirement savings and may also provide access to benefits during life.

What is term life insurance?

Term life is a policy lasting up to 30 or 40 years that pays if you die within its specified period. 

If you die after expiration, beneficiaries receive no death benefit. 

Term life is affordable and sufficient for most people's needs. Some term policies can convert to permanent coverage or include benefits usable during life in certain situations.

What is whole life insurance?

Whole life is permanent insurance providing a death benefit whenever you die, provided premiums are paid. Premiums are fixed, and part builds cash value accessible while alive. 

Whole life can cost six to 10 times the premium of term coverage with the same face amount.

How does life insurance work?

Life insurance begins with an application that may require a medical exam. The insurer evaluates age, health, and other factors to set premiums. 

If you accept the quoted rate, you sign the insurance contract. Provided required premiums are paid and death occurs before expiration, for term coverage only, designated beneficiaries receive the death benefit.