Life Insurance’ or ‘Life Assurance’ these days all of us give a lot of thought into, only a handful know how life insurance works. Moreover, there are large numbers of life insurance policies that are available for the general public to choose from. This can in fact confuse the customers as a result; he may get a totally inaccurate of insufficient policy for his needs. Also, there are so many life insurance agents who exploit such naïve people. Without knowing the nitty-gritty’s of life insurance, it is impossible to get the low cost life insurance.

Categorizations of Life insurance are as follows:
1. Term Life Insurance
2.    Permanent Life Insurance [which has the following sub types]
-Whole life insurance
-Universal life insurance
-Variable life insurance.

Term life insurance is meant for short time, whereas permanent life insurance is for the entire life time of an insurer. Term life insurance price may vary, but less than permanent life insurance cost. To know more about these policies schemes, one can look into insurance websites. Following are certain points to note down.

When you meet a professional broker to compute the basic life insurance rates, he will inquire about information pertaining to your life style such as whether you smoke, take drugs and junk foods; which are all the reasons for immature death. These help to work out the basic premium. Therefore an obese person or ill health person will have to pay high premium. Apart from life style information, one has to take medical test for working out the premium rate. 

If the medical tests do not reveal any serious health risks, you will be deemed ‘insurable’ and the premiums will be calculated based on the specific risk category into which you fall.  This risk category depends on factors like lifestyle pattern, occupations, gender, race etc.  If you do not wish to undergo medical tests for various personal reasons, you can opt for life insurance no exam policy that will require you to fill a basic questionnaire regarding your health and not undergo medical tests.  If the insurance carrier is satisfied with your reply, you can be eligible for this type of policy but at higher premiums.

The points to be considered while choosing the insured amount is critical. Points such as a prediction of your future outstanding debt and the amount of money you want your family members to use after your demise. Ideally anywhere between 8 to 10 times of your salary would be the best estimate. Your recipients of insurance should not a profile that creates doubts in the insurance company’s mind. If so, your application will be rejected. 

In your application; you need to mention the real facts about your life style. Even if your application is accepted and later on, found that false information was given, then the company would cancel the application and the entire amount paid until that time would be lost. The company would ask personal and uncomfortable questions and certainly this information would be kept secret. These points are only for the good of the insurer and are noted to work out the premium. If suicide or murder of insured takes place, no amount will be paid by the company to the beneficiaries.

The process of applying and receiving a life insurance policy can be broken down into parts: First, the application has to be filled out.  Next medical tests have to be undergone and the results attached to the application.  When the application is received by the insurance company, they will hand it over to the relevant authorities for scrutiny.  Using a statistical analysis, they will calculate your risk; place you in a specific category and such.

Using methods like ‘cost per thousand’ table, the agents will calculate your specific premium amounts.  At this time any high risk individual will be rejected.  If the application is approved, you will receive an insurance contract with details of coverage amount, premium amounts and other terms and conditions.  Read this contract very carefully, seeking help from professionals before signing it.  When you sign and return it, you can send in your first premium amount and you will now be the proud owner of a life insurance policy.