Buying life insurance isn't a sexy purchase, but it's fundamental to financial planning. That's why it's alarming that ownership of policies in the U.S. is at a 50-year low.

About a third of U.S. households have no life insurance, according to LIMRA, an insurance-industry research group. That's a shame, because life insurance, especially simple term life, is cheaper than ever and could prevent financial disaster for your family. (If nobody relies on your income, you might not need life insurance.)

A 30-year-old can buy $250,000 of 20-year term life insurance for $158 per year, or $3 a week.

The economic downturn undoubtedly shifted Americans' focus away from life insurance to competing priorities for household money, such as putting food on the table.

Nearly seven in 10 American households with children under 18, those that typically need life insurance most, said they would be in jeopardy if the primary breadwinner were to die.

Besides being cash-strapped, another reason people don't buy life insurance is because they don't know much about it, according to the survey.

"People are confused about their choices, and from behavioral economics we know that if someone is not certain that they're doing exactly the right thing, they will tend to do nothing," said Robert Kerzner, CEO of LIMRA.

To shed some light, here are some questions and answers about life insurance, focusing on term insurance.

Q: What is life insurance?

A: Essentially, it's paycheck replacement if you die. Life insurance is a contract that agrees to pay money to a beneficiary if you die while the contract is in place.

Term-life insurance is in effect for whatever term you buy, such as 10, 20 or 30 years, as long as you keep paying premiums. More complicated forms of insurance, such as whole life, universal life and variable life, often add investment components and are far more expensive. They stay in effect for life if you keep paying premiums.

Q: Who needs it?

A: Determine whether you need life insurance by answering the question, "Who would miss my paycheck if I died?" If you're single or have a working spouse and no children, you might not need life insurance. But some people like to have a small policy to pay for funeral and burial costs, to make a donation to a charity or to leave an inheritance.

Q: How much do I need?

A: A common rule of thumb is six to 10 times annual income. That gives you a ballpark figure, but it's inadequate. The amount you need depends on how old you are and how many working years you're looking to replace.

And consider that the payout from a term-life policy stays the same, but your expenses are likely to rise over time. Think of all that entails, from food and clothing to health insurance and retirement savings.

"It requires a bit more work than using a rule of thumb," said Byron Udell, founder of online life insurance broker AccuQuote.

Q: How much does it cost?

A: It depends. Healthy, younger, nonsmoking people pay less because they are less likely to die prematurely. Getting a new policy involves filling out forms and undergoing a free medical exam. Results of the exam will help determine what your rate will be. A 40-year-old male nonsmoker in great health might pay $355 a year for $500,000 worth of coverage over 20 years, according to figures supplied by AccuQuote.

Q: Where should I buy it?

A: You can shop online, with many online brokers offering help by phone, too. Or you can use a broker or agent in person. Get several quotes because premiums for the exact same policy can vary widely.

But you want to make sure the insurer will pay when you die, so make sure it's highly rated. Many comparison sites list ratings along with price quotes, or you could check ratings at such sites as StandardandPoors.com, Ambest.com and FitchRatings.com.

Insure.com recently released customer-satisfaction ratings for large insurers, available online at insure.com/best-life-insurance-companies.

You want to shop around because different insurers vary on how they evaluate different risk factors, such as being a scuba diver or occasional cigar smoker. So, premiums vary. "Major brands do not march in lock step," Udell said.

Q: What if I already have life insurance?

A: If you bought a 20-year policy, for example, you're not obligated to keep it for 20 years. You can walk away from a term policy whenever you want.

"There are millions of people out there who are paying too much and don't even know it," Udell said. "If you find a better term policy, why not replace the one you have. It never hurts to look."