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That depends on you. If you're a single person with no dependants, then you're far better off focusing on your own finances. For everyone else, ask yourself:

"What would happen financially to the people around me if I died?"

If the answer is there'd be little financial impact, then you probably don't need a policy. But if paying the bills, the mortgage, bringing up kids, food shopping and more would be a struggle, this is a cheap way to solve that.

It's easy to confuse with other similar policies. So here's a quick list of things it isn't:

• Mortgage term assurance
  This is bought to pay off your mortgage in case you die. It's also sometimes called 'decreasing term assurance' as the amount it pays out decreases as your mortgage decreases. For more on this, read the Mortgage Life Insurance guide.

• Whole-of-life insurance
  This is an open-ended investment based policy mainly used for inheritance tax planning. It runs out when you die, rather than after a fixed time.

If you are wondering why it's life "assurance" not "insurance", that's because assurance is for something that is certain to happen. Insurance is where there is only a risk of it happening... and death is assured.

Though some call this "insurance" too, as there's no guarantee you'll die within the term.

The amount paid out on your death should aim to pay off any outstanding debts (such as a mortgage) and provide your dependants with a reasonable standard of living. If your workplace gives you 'death in service' benefit, deduct it from the total cover you need.

A very rough rule of thumb for either parent is 10 times the highest earner's income. If one spouse dies, the other may need to stop working to care for young children.

However, the higher you set the payout, the more insurance will cost. You must balance the benefit versus the impact on your pocket now. If covering the full 'rule of thumb' amount is prohibitive, work out what you can afford to spend per month - eg, �10/month (MSE's Budget Planner should help) - then see how much cover that gets you.

To provide a regular income for your family, rather than a lump sum, the family income benefit (FIB) is an alternative - it gives an annual tax-free payment for a set period, rather than a one-off lump sum. Some best buy brokers below offer quotes for an FIB, but if you're not sure if it's for you, read the Getting Advice section.

If you're a couple, a joint policy covering both people will usually be cheaper than buying two separate ones. However, that's because it provides a totally different level of protection.

Joint life insurance pays out on the first partner's death as standard, then never again. This can leave the surviving partner uninsured - not great if dependants still need protection.

Couples should get a quote for joint insurance, then do two separate quotes for individual cover, and compare the total cost. Once you know how much extra the joint protection will cost, you can work out whether it is that valuable for you.

Sadly you can't guarantee a long life, but the healthier you are now, the lower the price. Monthly premiums increase with the likelihood of death within the term. Age, health, being a smoker or having a risky occupation can increase the price.

So 98-year-old, tobacco-chewing racing drivers who like to go cageless shark diving may struggle to get a good deal, even after reading this. Pricing radically changes depending on who you are, and what you do.

If you're over 50 and have several health issues (or you don't want to disclose them) an over-50 life policy is an alternative. It won't require you to answer any health questions and there's guaranteed acceptance up to age 80 or 85. Yet as a trade-off, they are MUCH more expensive and you can't claim in the first year or two. Read Martin's blog: Axa Sun Life and over-50s plans

The Consumer Insurance Disclosure Act, introduced in April 2013, (see our news story) ensures insurers have to ask the questions they want answers to, instead of consumers having to volunteer what information they think may be relevant.

With this in mind, if a claim's rejected and you feel you haven't been "treated fairly" (a key phrase, quote it in correspondence), make a formal complaint. If that fails, you've a right to an independent decision from the free Financial Ombudsman. Full how-to in How To Make A Financial Complaint.

Non-smokers pay a lot less cash than smokers, simply because they're a lot less likely to die during the term. To count as a 'non-smoker' you need to have been genuinely smoke-free for at least a year.

So one year after the date you quit, you should go through this process to get a new deal and you should save enormously. Don't be tempted to lie. If you died and it was discovered you had been a smoker, it could invalidate the policy. See other saving in the Stop Smoking MoneySaving guide.

Many already have a life insurance policy designed to pay off your mortgage in case you die within that term - it's called mortgage term assurance. If you have one, then a level term policy won't have to cover your mortgage when it pays out, so subtract that from the payout.

Also bear in mind that you may have 'death in service' cover at your place of work. If you do, check what the payout may be and re-calculate the sum you'd need.

On the flip side, don't assume you only need mortgage life insurance. It won't provide income for your family to live on, nor cover other debts. However, it may be cheaper to use a level term instead of a mortgage policy to cover both your home and family - just get the quotes and see.

The only payment you're likely to make to a broker will be any fees and charges, so there's little to be concerned about in terms of them going bust.

The bulk of your money will go straight to the insurance provider. These are covered by the same government-backed Financial Services Compensation Scheme (FSCS) as banks, meaning if they go into default, you're protected.

In the unlikely event it happened, the FSCS will try to find another provider to take over or issue a substitute policy. However, if you've ongoing claims, or need to claim before a new insurer is found, the FSCS should ensure you're covered. For more, see the Insurance section of the Savings Safety guide.

We're not big fans of critical illness policies, which sound like they'll pay out if you get any serious illness and can't work. That isn't true - most policies pay out a lump sum if you get specific illnesses as defined by the terms of the policy.

For example, losing one leg isn't critical, but losing two is! Don't think "I'm covered for cancer", as most policies only cover a limited range of cancers.

Picking a good critical or serious illness policy would take a doctor and a financial nerd combined. So one option is to get the level term cover and an income protection policy, which does just that - protects your income from a range of eventualities. If you want critical illness though, speak to an adviser.

If you die, the life insurance forms part of your estate, which could mean it gets hit with a huge whack of inheritance tax. In many cases, it's possible to avoid this by 'writing the policy in trust', as long as this is done at the time the policy is taken out.

Do this and the insurance pays out directly to your dependants, so it never becomes part of your estate, avoiding inheritance tax and speeding up the payout.

This is relatively easy to do. When you get most insurance policies they include the option (and papers) about writing in trust at no extra charge. Although once a trust has been set up it is very difficult to cancel, even if all your beneficiaries agree, so think carefully about who a policy is designated to go to. If you decide to do this, you will most likely need to get advice.

If you already have a level term policy, this guide could help you cut the cost. However there's no guarantee you'll save. If your policy was bought years ago or you've had health problems, the savings from buying a cheaper way may be cancelled out by your increased risk level.

If a new quote shows you can save (ensure the cover is at the same level though), all you need to do is set up the new cover and once you've got confirmation, end your existing policy. A check of its terms and conditions first should never go amiss.

The most common reason to get life insurance is to provide for children, so aim for it to last until they no longer need to be reliant on you. For most, this is until they finish full-time education, whether that's 18 or 21. If the intention is to cover a partner, it should last until they reach pensionable age.

Don't feel obliged to cover a round number of years. Policies may be for 17 years rather than 15 or 20, if that's what's needed.