Before deciding which type of policy is best, a consumer should decide on how much coverage to buy, said Hunt. He suggested a general rule of thumb is to buy coverage that equals six to eight times the policyholder's annual income. Choose a financially strong company, advises Natalie Grossner, a certified financial planner in Carmichael. Consumers can check the claims-paying ability of insurance companies by checking with independent rating agencies. The best known is A.M. Best.
Many libraries have rating guides for consumers to check.
But people can also call rating agencies, sometimes for a fee, to get information over the phone. Finally, be sure you need life insurance before shelling out money for it. College students are pursued by life insurance companies. Indeed, it is cheap to buy life insurance when you're young. But who are you buying it for if you don't yet have dependents, Grossner asks.