Choosing insurance
By the BabyCenter editorial staff

Thinking about life insurance isn't easy: It forces you to face your own mortality and the thought of leaving loved ones behind. But difficult as it is, it's crucial to make time for a heart-to-heart with your spouse, especially with a new baby in the picture. By planning for the unspeakable, you can ensure that in the case of your death or disability, your family will continue to live in the manner to which they're accustomed — and be able to pay the mortgage, the health bills, other debts and, of course, college tuition.

How much do I need?
The rule of thumb is six to ten times your annual salary, but everyone's situation is different. How much insurance you'll need depends on various factors:
• How much your family spends annually on items like housing, food, and clothing;

• How much your family will need to cover large one-time expenses, such as your children's college educations;

• How much your spouse earns (and hence how much of your family's expenses that can cover);

• How much your investments and other assets are worth (and hence how much they can cover your family's expenses).

What's term insurance?
This simple insurance policy works like car- or home-owners' coverage: If you die while the policy is active, your family gets the money for which you're insured. If you don't, the policy expires, and the insurance company keeps the money (still better than the alternative!). Some term insurance policies give you the right to renew at the same rate for multiple years, while others do not. The former are generally a bit more expensive.

Term life insurance makes sense for most young, middle-income families with children because it covers a set period, with affordable premiums. A typical insurance premium for $250,000 coverage might be $150-$200 a year for a 30-year-old nonsmoker. Rates are fixed when you buy, and increase as you age. Click here for more information.

What's whole life insurance?
This more complicated option, also called cash-value insurance, offers both an insurance policy and an investment account. The premiums are larger than those for term insurance, but a portion of those funds go into a tax-deferred savings account. The rates are fixed: You'll pay the same premium at 30 as you will at 60. Upon your death, your spouse or family will collect the death benefit. But you can also choose to cash out the policy when you're older or retired and net the tax-deferred savings. Click here for more information.

Do I need disability insurance?
If you're between age 35 and 65, you're more likely to become disabled — and unable to work — than you are to die. Disability insurance insures your earning potential, and it makes sense. Standard recommendation: Insure yourself for two-thirds of your income. Click here for more information.

What about mortgage insurance?
This policy insures that your entire mortgage will be paid off upon your death, leaving your heirs a paid-for house. But you should probably skip this type of insurance, even though it sounds so attractive. Term life insurance can do the same thing for a much cheaper price, and it allows your heirs the option of keeping the house, paying off the mortgage, or investing the insurance proceeds.