Life insurance is one of the best tools for protecting your family's future - and the younger you are, the cheaper it is

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If your family relies on you for financial support, it's probably time to get life insurance.

In exchange for a monthly premium, a life insurance policy can replace income, help pay off debt, or provide a savings cushion for your dependents if you die prematurely. How much you'll pay for a policy depends on how much coverage you want, the type of policy you get, and how much risk you pose.

Generally, the younger and healthier you are when you buy life insurance, the cheaper it will be, regardless of the amount of coverage.

The average American can expect to pay between $300 to $400 a year for life insurance, according to insurance-comparison site Policygenius, but it really depends on your situation.

An analysis of 80,000 life insurance quotes by Noexam.com revealed that the best time to buy life insurance is in your 30s. Because age and health are two of the most important factors in determining rates, you'll get similar coverage at a lower monthly cost, writes Jonathan Holloway, a life insurance agent and the founder of Noexam.com. From ages 30 to 40, the average cost of life insurance rises 63%, according to the analysis.

Policygenius can help compare coverage to find the right insurance for you, at the right price »

What is life insurance?

Life insurance is one of the best tools to protect your family's future. Many traditional employers offer life insurance coverage for employees, but it's usually a multiple of annual salary and not enough to replace income for a family. Group policies don't require a medical exam, though, and are often free and the money is guaranteed, so it's typically worth taking.

Some employers offer supplemental life insurance to make up the difference, but it's smart to compare rates for additional coverage through a third-party broker.

If you buy a private life insurance policy for extra coverage - or if you're self-employed - you can choose the exact coverage amount you need. Typically, the higher your income and the more expensive the city you live in, the more money your family will need in your absence.

Your health is a big factor in how much you pay for life insurance. In addition to considering your medical history, most insurers require a medical exam during the underwriting process to evaluate your current health, which isn't as intimidating as it sounds. The medical exam is used to identify any risk factors that may indicate you won't live to the end of your policy.

Are there different types of life insurance?

Life insurance is broken down into two main types: term and permanent. Term life insurance lasts for a fixed period of time, usually 10, 20, or 30 years, while permanent life insurance has no end date.

From the time the first monthly premium is paid, the beneficiary of the policy is entitled to the full amount of coverage if the policyholder dies. The death benefit, as it's called, is income tax free to the recipient.

For most people, experts recommend term life insurance because it's cheap and simple. The premium on a term life policy is fixed, meaning it remains the same until the policy period ends.

Those who want to lock in coverage for life may consider a permanent policy, but should also be prepared to pay six to 10 times more than they would for term life. Permanent life insurance comes in a few variations, the most popular being whole life insurance, which is a hybrid between an investment and an insurance policy.

Deciding whether whole life insurance is right for you boils down to two questions, according to insurance-comparison site Policygenius: Do you want to build cash value? And/or, do you want to leave money behind for your spouse, kids, or grandkids? If you answered "yes" to either of those questions, whole life insurance may be a good option for you.

Policygenius can help compare coverage to find the right insurance for you, at the right price »

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