Nobody likes to think about life insurance - at least, nobody but insurance agents. After all, when we consider insuring our very lives, we are forced to face our own mortality.

It's important to note that life insurance isn't for everybody, but if you are the head of a young family, it is vitally important to ensure that your children and/or spouse not be beset with financial hardship in addition to emotional grief in the event of your untimely passing.

Term or Cash Value Life Insurance?

The first thing you need to determine is which type of life insurance is a best for you. Term life insurance is in effect only for a specific duration, or term, specified in the policy. If you were to pass away during this term, your beneficiaries would receive the policy's death benefit.

If you are fortunate enough to live through the duration of the policy, then it expires worthless. Most term life insurance policies allow you to renew, but you can only do so at a higher premium.

The benefit to you is that the initial premiums are much lower than with cash value (see below), and you might decide you no longer need life insurance once your children have reached adulthood.

Cash value life insurance has much higher initial premiums, but the premium never goes up. Furthermore, a portion of all premiums that you pay in bears interest, making cash value life insurance an investment product as well as insurance.

Earnings generated by the cash value can be withdrawn or borrowed against, but the increased price of the monthly premiums makes cash value life insurance a poor fit for most people. The typical 40-year-old would pay more for two months of cash value life insurance than he would for an entire year of term life.

How Much Coverage Is Enough?

The conventional rule of thumb is that a growing family needs at least five years of the breadwinner's annual income in addition to any outstanding debts. An additional $10,000 should be budgeted for funeral expenses, and another $15,000 or so to provide an added cushion.

So, a 40-year-old father of three with a wife who does not work outside of the home, and earns $70,000 per year should be insured for a base amount of $350,000. If the family carries $10,000 in debt, then this should be added to the $25,000 in funeral and other expenses for a running total of $385,000.

Although his children would undoubtedly qualify for financial aid, it is probably best to budget at least another $45,000 for their college education for a grand total of $430,000.

Some Simple Ways To Save Money

First and foremost, don't smoke. Justifiably, smokers pay much higher premiums.

Second, you should strongly consider term life insurance, particularly if you are 40 or younger. Look at how much you will be saving each month compared to the cash value premiums, and invest that much into a mutual fund of your choice.

You're likely to see far better results, and eventually you may decide you no longer need life insurance. After all, if you build an investment portfolio of sufficient size, it may be your best life insurance product of all.

Most of all, keep in mind that there are literally thousands of companies that sell life insurance, and competition within the industry is steep - that's good for the consumer. Shop around, interview multiple agents, and find the one right for you.

A good life insurance agent will ask you probing questions so that she fully understands your financial situation and goals. It is easy to distinguish between an insurance salesperson and a true insurance professional.

Insurance agents have developed a negative reputation over the years, perhaps justifiably so. But there are plenty of great agents who will put your needs above their financial interests. Settle for nothing less!