This is a difficult question — one whose answer will vary depending on your personal circumstances.
First, recognize that in any life insurance purchasing decision, two questions must be answered:
- How much life insurance should I buy?
- What type of life insurance policy should I buy?
The first question should always be resolved first. For example, the amount of life insurance that you need may be so large that the only way you can afford it is through the purchase of term insurance, since term insurance has a lower premium.
If your ability to pay life insurance premiums is such that you can afford the desired amount of life insurance under either type of policy, it is then appropriate to consider the second question — what type of policy to buy. Important factors affecting this decision include your income tax bracket, whether the need for life insurance is short-term or long-term (e.g., 20 years or longer), and the rate of return on alternative investments possessing similar risk.