What external hard drive should I use to back up my iMac before I update to OS Monterey?

Do you have a Rescue Plan In-Place. This comprises having 3 Backups using 2 methods and 1 Off Site incase of Theft, Loss or Natural Disasters. A Time Machine Backup  is very useful and can be used to Revert to Previous Working macOS. 

For addition purposes - two Tested Bootable Clones each to separate external drives. This is insurance incase the upgrades goes sideways. At least one Tested Clone and / or Time Machine Backup should be Off - Site

Most drives can be used for a backup as long as they are larger than your internal drive. I would use Time machine connected to your iMac all the time and then another to backup on some schedule like P. Phillips has stated.

just about any manufacturer's drives will work. be they HDDs or SSDs. just make sure to NOT use any of the manufacturer's preloaded software that is used to make the drive "mac ready". when you use their software, you risk having that software not working with each macOS upgrade / update. instead you should use "Disk Utility" (found in applications > utilities) to erase the bare drive and reformat it as either APFS or macOS Extended (journaled).

Second all the above suggestions