Insurance agents usually offer policies that cover you and your family throughout your entire life (i.e. whole life, universal life, etc.). There was a time when these products made sense because there were few other ways to financially protect your family, and these policies provided a tax shelter for savings. Nowadays there are college savings plans and retirement plans, and most people are better off purchasing cheaper term insurance and investing the difference in these other plans. Besides, insurance should only be necessary as long as there remains a need to financially protect your loved ones.

The secret to buying a policy with the right term is figuring out how long you need to be insured. You can start by estimating when your children will be grown up and no longer in need of your financial support. So, if your children are 3 and 5 now, you'd probably want a policy that covers you at least until the youngest is 22, so that's about a 20-year term. But this depends somewhat on your age as well.

Let's suppose that you also want to cover your spouse for your lost income until what would be your normal retirement age, say 65, and you're only 35 now. Then you would want a 30-year policy.

Keep in mind that insurance gets very expensive as you leave your 50's. So you'll pay more to cover yourself until the age of 65, even if you lock in a level-term 30-year policy when you are 35. Coverage past age 70 or so may be unattainable or certainly too expensive. Develop a plan that provides for insurance protection but also reasonablly minimizes its duration while building retirement and other savings that can be used to offset your insurance needs later in life.