In the wake of the recession only 44% of American households have individual life insurance, a half-century low. Fewer still have disability insurance. If you're uninsured or haven't reviewed your coverage recently, here's a reason to get moving: You're the youngest now you'll ever be, and as you age the cost of coverage will only rise. "A 35-year-old male is going to pay less than a 36-year-old male," says Mark Maurer, president of brokerage Low Load Insurance Services.

Here's how to get started.

### Find your family's number

Insurance agents are fond of citing multiples of annual income that people should try to replace with life insurance. But what matters is your own family's needs. "The key question is ‘Who suffers if this person's income is gone?'" says William Wixon, a certified financial planner in Maple Grove, Minn. In fact, Wixon occasionally advises his older clients to let their life insurance policies lapse.

Young parents, by contrast, generally do need life insurance. But situations differ. Two highly paid professionals might be able to raise their kids just fine on one of their salaries, while a stay-at-home spouse needs extra protection should something happen to the sole breadwinner. Estimate what your survivors would need to cover future bills, including a mortgage and the rapidly rising cost of college. Then subtract your spouse's expected earnings, plus death benefits your family would receive from group life insurance policies, Social Security and other sources.

### Pick a product

Life insurance comes in two main flavors, with many variations. The simplest and cheapest--and the best for most young families--is term insurance. With term you pay premiums for a number of years set at the outset. In exchange the underwriter agrees to pay a death benefit to your beneficiaries if you die during that term. Outlive it and your heirs get nothing.

Term carriers compete fiercely on premiums, and you pay only for what you need for as long as you need it (say, until your kids are grown). If this strategy appeals to you, look for "level" premiums for which the annual cost is fixed for the life of the policy--say, for 10 or 20 years. A 40-year-old woman could get a $1 million, 20-year level term policy for as little as $540 a year.

The other flavor, permanent insurance, is far more expensive and can be mind-bogglingly complex. The advantage is that it stays in force and pays off when you die. Permanent (whole or universal) policies can also work as a sort of forced savings plan, points out planner Rachel Sanborn at Financial Focus in Wolfeboro, N.H. That's because, over time, they build up a cash value that you may be able to tap into or use to reduce premiums when you're older.

Still, view with skepticism broker pitches of permanent policies as great tax-deferred investments. Often they aren't, due to high fees, mandatory contributions and withdrawal restrictions. Moreover, a significant portion of permanent policyholders stop paying premiums, forfeiting some or all of the cash value they've amassed over the years and even the death benefit.

Permanent policies tend to make the most sense for those whose assets will be subject to federal and/or state estate taxes when they die or who want to generate cash at their deaths--for example, so a family business can go to one child and cash to another. But if estate planning is a concern, first consult an attorney or fee-only financial planner who doesn't earn life insurance commissions.

Unsure of whether you want permanent coverage? You can keep your options open by buying a term policy that can be converted into more expensive permanent insurance based on your health status at the time your policy was originally issued.

### Comparison shop

Local agents will gladly line up quotes for you, but beware: Whether they represent a single insurer or are independents who work with many companies, agents have an incentive to steer you toward policies that pay them the highest commissions. Low Load's Maurer says he's happy to disclose to clients his commissions on various policies. Ask your broker to do the same, as well as to show you a range of competitive quotes.

If you don't have a broker, turn to the Web. NetQuote.com and InsWeb.com are referral services that allow you to type in some basic information and receive multiple quotes from brokers. AccuQuote.com is itself an independent broker that will provide multiple quotes and sell you the insurance.

Don't be surprised if you end up paying more than the lowest quote. Underwriters have a habit of touting "preferred" rates for an undefined minority of applicants in perfect health and then concluding you're not one of those prime specimens.

As you home in on price-competitive policies, consider too the underwriter's financial strength. Many websites provide ratings from A.M. Best, Standard & Poor's, Fitch or Moody's ( MCO - news - people ). Stick with ratings of A or higher.

### Hedge against disability

Working adults have a 3% chance of becoming disabled before retirement age, compared with a 1% to 2% chance of dying. Yet only 27% of adults have private disability coverage, even though the disabled must still cover their own living expenses, as well as their families'. Don't count on Social Security disability to pay your bills. It can take years to start receiving benefits that average only $1,064 a month.

Many employers offer basic, low-cost group disability as a benefit or for an extra out-of-pocket premium. It's better than no coverage. But group policies often have offset provisions, meaning they pay you less once Social Security disability kicks in. Plus, group coverage might render you ineligible for an individual policy, which (unlike a group policy) will continue if you change jobs. Another advantage to buying an individual policy early is that you can renew coverage at your original rate even if your health deteriorates, notes Michael Horrow, an insurance and policyholder attorney at Donahue & Horrow in Los Angeles.

Disability policy literature can go on forever, but a few details are crucial. How is a "disability" defined? The best option pays if you're unable to perform your own occupation, or "own oc" in insurance lingo. A surgeon would be covered if she could no longer operate. The alternative, "any occupation" coverage, would only start paying if she became unable to act even as a Wal-Mart ( WMT - news - people ) greeter. For obvious reasons, an "own oc" policy will cost more.

"It is absolutely worth the investment," says Horrow. Some group policies, he cautions, offer "own oc" coverage initially but after two or three years convert to "any oc."

The benefit period is crucial, too. Some older policies last for life, but those are harder to buy now. Others cover you for only two or five years, or until age 65. Consider, also, paying extra for a cost-of-living rider. A $6,000 monthly payment might sound good now but not in a decade or two if unadjusted for inflation. Lastly, be aware of the tax implications. If you pay your premiums at work with pretax dollars, Uncle Sam may demand a cut of your benefits.