For most people, term life insurance is the most cost-effective choice. Calculate needs by adding outstanding debts (mortgage, loans), future obligations (children’s education, spouse’s income replacement for several years), and final expenses, then subtract liquid assets and existing coverage. A common rule of thumb is 7–10 times annual income, but tailor the number to your family’s budget and goals. Term policies provide high coverage at low cost for a defined period (10–30 years) and are ideal for replacing lost earnings during dependents’ formative years. Permanent life insurance (whole or universal) includes a cash value component and higher costs; consider it only if you have estate planning needs, tax strategies, or specific long-term obligations that term cannot cover.
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