You probably don't need life insurance if you're single and supporting only yourself. But if you have children or other dependents, buy life insurance equal to five to eight times your annual salary. Your spouse should have the same coverage. (Most employers provide only enough life insurance to cover one year's pay.)

For most of us, term insurance is the best value. It pays a benefit if you die during the specified term (anywhere from one to 30 years), which means it will cover the years when you're most likely to have dependents and a mortgage. Term premiums for a healthy 40-year-old are about 80 percent lower than those for permanent insurance (also known as cash-value insurance), which provides coverage as long as you want to keep paying for it.

Term may not be the best policy, however, if you know you'll continue to have dependents throughout your retirement years or you have extensive debts. Renewing a term policy is expensive in your sixties or seventies. If that's the case, consult a financial planner or insurance agent.