If you have your Jira password readily available and it does not change too often, you can go ahead and use it. You will need to use the API token in the following cases:
- If your Jira authentication required two-step verification, you can use password or API Token for authentication.
- If you use Single Sign On (Google apps) to connect to your Jira account, you will need to generate an API Token to authenticate as you do not have a Jira password available.
To generate a new API token, go to https://id.atlassian.com/manage/api-tokens and hit Create API token.