Buying insurance is very confusing. Every time you turn around, the insurance industry seems to have some new "gimmick" that they claim is just perfect for you.

No matter what your insurance needs, though, we don't want you paying too much, or paying for coverage you don't need.

Does someone else depend on your income, or on services you provide that would have to be paid for (for example, a homemaker)? If you answer yes, you need life insurance. It's that simple.

Life insurance is meant to protect your family. It is not an investment. No matter how persuasive a life insurance agent sounds, we never want you to buy life insurance as an investment, a college savings fund or your retirement "nest egg."

Sure, you may find a life insurance agent who will offer you a pie-in-the-sky 8% or 9% rate of return, but those high yields are an estimate of how well the agent's company thinks the investments will do. We've yet to find a policy that could sustain these high rates.

You'll find a better measure of a policy's performance by using the policy's guaranteed rate of return. Chances are this figure is around 3% or 4% (which will probably be lower than what you'll actually receive, but we'd rather use the worst-case scenario for future planning).

There are two simple steps that to virtually guarantee you have the right insurance for your needs: select the type of insurance that is right for you, then, calculate how much insurance is enough protection. Let us help you with each.

What Type of Life Insurance Should You Have?

Here are the five most common types of life insurance and what we think of each:

Term insurance. Our #1 choice for most people! Term insurance offers death protection, pure and simple. This is the cheapest type of policy you can buy, and the face value remains constant–you always get the full value of the insurance you've paid for.

Whole life. This is the best type of life insurance policy when you're over 55. Premiums are fixed, and the policy's cash value - if you're lucky - can be used to offset premiums in later years...depending if the insurance company makes good investments.

Universal life. Initially, for a universal life policy, premiums will be about 1/3 less than for a whole life policy, but they will rise over the years. We prefer whole life.

Variable life. Steer clear of variable life. The policy's face value rises or falls based on the performance of investment choices you make. Don't gamble with your insurance.

Universal variable life. Even more complicated than variable life. Your face value and your premiums can change from month to month. Way too much risk for our blood.

Dolan Smart Money Move: If you are under 55, we recommend for many that you buy low-cost term insurance in order to be able to buy enough insurance to protect your family. If you're over 55, term insurance premiums will generally be too expensive. A no-bells-or-whistles whole life policy will be cheaper over the long haul. And remember, once you retire and have fewer financial obligations such as a mortgage or college tuition and you're living off investment income, you may not need life insurance at all.

Page 1 2 3 Next »