You’ve made the decision to buy life insurance, but you’re not sure exactly how to go about purchasing a policy. There are several important steps in the process, and messing up just one of them could result in you buying the wrong type of policy.

1. Determine how much life insurance you need. Add up all of your current expenses and future financial liabilities. These would include everything from home mortgage payments to your child’s future college education costs.

2. Figure out how much money you have to spend on life insurance. Once you’ve figured out how much you need, you must determine a rational budget for purchasing life insurance. Consider using the withholding calculator located on IRS.gov to help you optimize your tax withholding so that you have enough money to purchase the right kind of life insurance policy for you and your family. If you think you might need additional funds, consider raising some or all of your current insurance deductibles. Also, consider refinancing your home mortgage or even your auto loan.

3. Determine your insurance goals. Do you want to buy a term insurance policy and save money on the side so that you won’t need life insurance in the future or do you want to combine your insurance with your savings? While permanent life insurance premiums are often initially higher than term life premiums, the premium usually ends up being the lowest over the long-term when you compare it to term life.

4. Contact several life insurance companies for quotes. Make sure you get quotes for both term life insurance and permanent insurance. Compare the life insurance surrender cost index as well as the net payment cost index for all policies. These indices give you the most accurate measure of how much the policy will cost you over the long-term.

5. Sign an application with the insurance company that you think offers you the best value. You’ll need to undergo a health exam in most cases. Once you sign the application, you’ll get an insurance binder. This binder gives you temporary insurance coverage until your policy is approved by the insurance carrier.

6. Figure out how you’re going to adjust for inflation. It’s a sad fact of life: your money becomes worth less and less each year. There are a few ways to compensate for this. You can commit to buying a new life insurance policy at regular intervals for the rest of your life as your needs dictate or you can purchase a permanent life insurance policy that offers you an increasing death benefit option. Policies with an increasing death benefit option solve the problem of having to purchase additional policies since these policies effectively adjust for inflation every year.