Life insurance provides families with financial security should a spouse or parent die. Once you have dependents, the question "What if you got hit by a bus?" requires serious consideration. (See the video "Preparing for the worst.")

First, the basics

There are essentially two types of life insurance: term and whole. You can apply for a policy online, seek help from a financial planner or buy through an agent.

A term policy covers a period of one to 30 years. When the insured dies, the face amount of the policy is paid to the beneficiary. Term life has no savings component. If you haven't died by the end of the term, you don't get any money back. For most Americans ages 20 to 50, a term policy is the best and simplest option. (See "The debate: Term vs. whole life")

In the past, rates skyrocketed if you were older than 40. But now good rates are available in your 40s and 50s if you're in good health. Insurers today can better estimate risk by taking into account everything from cholesterol levels to family history. (See "Now's the time to buy term-life coverage.")

A whole-life policy, also called permanent life insurance, not only protects you from the day you purchase it until you die, but it also includes an investment in bonds, money markets or stocks. The policy builds cash value that you can borrow against. The three most common types of whole-life insurance are traditional, universal and variable.

The downside of whole life: It's expensive because part of the money is put into a savings program, and it typically comes with high fees and commissions. (See "When it pays to consult an insurance pro.")

If you already have a policy but think you are paying more than you would had you opened it recently, shop around.

How much is enough?

Deciding how much really just depends. If you're single with no dependents, you probably don't need any at all. The key time to get life insurance is when you have children. In addition, get coverage if you have a spouse who doesn't work. (See the video "How much life insurance is right?")

A rule of thumb for life insurance is five to 10 times your annual salary. MSN Money's estimator of life insurance needs can help you decide how much coverage you should have. (Also see the video "A lifetime of life insurance.")

Consider these tips:

Don't buy life insurance for young children. It's largely wasted because you're not replacing income. (See "Insurance plans you can avoid.")

Look at your budget before committing to a premium. When you buy life insurance, you have to keep paying the premiums throughout the term, no matter what, or lose your coverage. (See "Your 5-minute guide to budgeting.")

Don't let a policy lapse if you plan to buy another one at some point. A high number of lapses could indicate financial instability. (See "The effects of lapsing on your policy.")

You might be able to drop your life insurance if your children are grown and your spouse has income.

An insurance policy is only as good as the company that backs it, so check out a company's financial rating before signing on. Avoid advisers who say the ratings are unimportant or unavailable.

If you are single and simply don't want your relatives burdened with the cost of a funeral, consider contributing to a Totten trust savings account. (See "Plan -- and pay for -- your own funeral.") Should you take out a life insurance policy later on, you could use all your contributions to the trust, as well as the interest earned, for something else.