Lace work is the classic scenario for lifelines. If you have very little experience with lace, I would encourage you to use a lifeline no matter how simple the pattern is. As you get more comfortable reading your stitches and making and fixing mistakes, you can make judgment calls about whether you need a lifeline or not.
Knitters also report that lifelines are useful when knitting brioche. Fixing mistakes in brioche can be a real pain, because a brioche stitch involves more than one strand of yarn doing different things at the same time. Unknitting those stitches and putting them back on the needles can create a real mess, especially in two-color brioche. Having a lifeline in place will save you significant amounts of frustration.
If you are working on a project with yarn where it’s hard to see your stitches, a lifeline can be useful there. This is especially true for yarn in dark colors, yarn with a strong halo from mohair or suri alpaca, unspun yarns, yarns with a significantly fluctuating thick-thin-thick-thin structure, very lofty woolen-spun yarns, and certain highly textured novelty yarns.
There are few helpful questions to ask to know when to use a lifeline: 1. Where is a spot with mostly knit stitches where I can insert my lifeline? 2. Is that spot somewhere in the repeat where I will be able to easily identify it and resume working from it? 3. How often do I think I might need to rip back this work?
When choosing a yarn for your lifeline, keep in mind two key factors: it needs to be visible against your work, and it needs to be a smooth yarn so that it doesn’t snag your stitches. Usually, I choose a worsted-spun scrap yarn. I make sure it’s in a lighter weight than the yarn I’m using for my project. I also choose a piece of yarn in a contrasting color.