Many people find the very thought of life insurance a disquieting subject, but the truth is that we will all die one day and if we have loved ones it is only right that we leave them with some financial security when we are gone, or that we at least provide enough that none of our bills or other financial obligations will fall to our heirs.

One of the most common ways of doing this is by purchasing life insurance.

The purchaser of a life insurance policy has basically two choices: to purchase a whole life policy or to purchase a term life policy.

A term life policy has a specified time limit - say ten years. At the end of that time, at the end of ten years, the policy lapses and becomes worthless. If the policyholder wishes to continue being covered by term life insurance then he or she must purchase a new policy, with a premium price which reflects the ten years that the policy holder has aged since the start of his or her first policy.

A whole life policy, on the other hand, has no expiration - except the death of the policy holder. The premium that is set when the policy is purchased is the premium that is paid for the life of the policy.

For many people the fact that the initial premium on a term life policy is less than the premium on a similar whole life policy is a deciding factor. Whether the lower initial premium outweighs the long-term benefits of a level premium must be determined by the circumstances and expectations of the purchaser of the policy.

But whichever type of policy you purchase there are a few things you can do to lower your yearly cost of life insurance.

Buy your policy now rather than later. Life insurance premiums are based in part on the age of the purchaser at the time of purchase - the younger you are the lower your premiums will be.

Smokers pay a much higher premium than do non-smokers. Those in dangerous occupations pay a greater premium as do policy-holders who are overweight or in generally poor health to begin with. If you drive a sports car or other high-performance vehicle you will probably be looking at higher monthly premiums.

Keep and maintain a good credit rating. Believe it or not, your credit rating affects how much you pay for life insurance.

If you can pay your premiums by the year rather than monthly you will also get a break.

Combining different insurance policies, such as homeowner’s or auto at the same company will usually give you a multiple-policy discount, if not on your life insurance then on one of your other policies.

Once you know what type of policy you want and for how much coverage get online and compare prices at one of the many websites designed for the purpose. Be prepared to answer several rather personal questions, but the time and effort you put into comparing policy prices today can pay off handsomely for years to come.

Life Insurance as you all may know is insuring the life against unforeseen events happening in your life. Today the life has become so stressful that you need to get yourself protected at every point of time. Your loved ones who are dependent upon you for all your financial needs in life will become helpless if they are to face with any kind of situation like this. Life insurance provides the cash to lighten the financial burden imposed on you or your family by a serious event such as your death, prolonged illness or disablement.

Calculating the life insurance premium is about calculating the chance of having to pay out. For non-life insurance this can be simplified to calculating the chance, multiplied by the costs. For life insurance the premium depends on three factors: costs, interest and mortality.

1. Costs

The insurer’s expenses make up the costs. Think of salaries, computers, and maintenance of buildings. It also includes the commissions to be paid to the agents. It is advisable to base the premium calculation needed for the risk on a fixed percentage of costs in the premium

2. Interest

Especially with regard to life insurance we have to consider interest. When the policy provides for a pay-out for when the insured person dies, then the insurer knows that he will have to pay out at some time. He only does not know when. In the course of the years he will receive insurance premiums that he has to reserve for the pay-out that will happen one day. Suppose that 32 years have lapsed between taking out an insurance policy and the moment of dying, then the insurer will have received interest over 32 years on the first premium payment, over 31 years on the second payment, etc.

If we assume a premium of Rs 100 and a rate of interest of 5% per year, the insurer will receive in premiums and interest: [100*1.0532] + [100*1.0531] + [100*1.0530] + etc. This is 476+454+432+ etc. = 7,906. Especially when it involves a longer period the effects on interest income are huge. In 30 years a 5% rate of interest has more than quadrupled the amount.