The rule of thumb is, you likely need some form of life insurance unless you: 1) are independently wealthy (self-insured) and already have an estate; 2) have no debts; 3) have no dependents, favorite relatives or charity causes or; 4) have no business interests/responsibilities.

Life insurance is one of the most important elements of a solid risk management strategy, but it is also one of the most misunderstood.

Here are several points that help you avoid mistakes when buying life insurance:

Life Insurance is protection not an investment. Whole life, Universal life, cash value and variable life policies basically offer protection with a cash value, which adds to the cost and eats into return. They are not investment vehicles. The best investments, for most Americans, are through IRA and 401(k) accounts.

Understand what you are buying. There really is only one type of life insurance: term insurance. All other types are a mutation of or an addition to it.

Understand the true purpose. Buy life insurance to protect your loved one or other beneficiaries from a catastrophe, the loss of your income.

So do your own homework. Counsel with your agent but don't rely exclusively on their advice. A yearly renewable term policy is one of the best choices in many cases, but since the commission is low many agents are reluctant to sell them.

Periodically review your needs. Holding on to the same policy forever is probably not a great idea. Your financial situation and risks are likely modified with other life changes. It is well advised to periodically review your risk management needs and strategy, including your life insurance policies. Schedule an annual risk management check-up and by all means reassess your strategies when you have gone through life changing events.