You should check it when cold for a accurate reading. Do not over fill or you could break a seal within the system. Low levels can be detected when your break light comes on even though your emergency break is not on. Coolant Preston Antifreeze is what I use. It last a long time, and if maintained will keep you system form corroding.
Corrosion can cause long term damage, and can help the water pump to fail.
I flush my engine once every two years. Tap water is generally ok to use, but if you are anal you buy distilled water like myself. The less contaminates in the water the better. Strait coolant will cause your engine fail. I sure an engine flush kit to flush my coolant.