There are different kinds of life insurance policies with different life insurance rates. Term life insurance rates are generally cheaper than the whole life rates. However, since something, which is cheapest is not necessarily be the best, let us look at some of the different kinds of life insurance policies.

You are most possibly aware that there are mainly two type life insurance policies:

•    Temporary term life – Such policies provides protection for a specified period at a specified premium. The policy does not accumulate cash value, i.e. it does not provide any investment option. The premium buys protection in the event of the death of the insured and nothing else.

•    Permanent policy – Such policy remains in force for the life of the insured and the payout is assured at the end of the policy. Such policies accrue cash value and so they are often considered as good investment option. In fact, often people buy these policies for the investment opportunity they provide rather than for the protection they promise. Of course, that does not make them less an insurance policy.

Permanent life insurance that offers fixed return on the payment of a fixed premium is known as whole life insurance. The policy will lapse, if you do not pay the premiums on time. Universal life insurance, another permanent life insurance product, offers flexibility in the amount to be paid as well as in the time of payment. The third type of permanent policy is variable life insurance. Such a policy follows the same mould of universal life, but shifts the risk to the consumers along with chances are grater profit. That is, you can get a good return if the market is strong, but if the market goes down, so does your return.

If you give it a thought, you will find that term life buys you peace of mind more than anything else does. Your family may not have the scope of claiming any benefit at all; may you live long! However, you just cannot leave your family without any life insurance coverage! Who knows, you can be that one percent of the policyholders who dies within the term. Better be prepared than be sorry. However, you will not like to pay a big premium in such a case. Moreover, if you could pay premiums at a higher rate, you would have bought a permanent life insurance policy!  If you have opted for term life, you have done so because of its cheap life insurance rates.

The main variables of term life rates are age, sex and tobacco use. The younger you are the cheaper will be the term life rates. It has been seen that women live longer than men live, so they are entitled to lower rates. Tobacco use invites a very steep life insurance rate. You are entitled to non-smoker benefits, if you have sopped smoking at least a year ago. Your health and right body mass ratio as well as the face value and coverage term of the policy also helps to determine the term life insurance cost.

If you are wondering how the rates can be so low in case of term life, there is no magic involved. The carriers take very little risk while insuring a young and healthy person for a limited period because the chance of such a person dying within the specified term is very low. As the carriers do not pay any benefit unless the policyholder dies within the term, no death claim is paid in 99% of the cases. This enables the carriers to make a good amount of profit and lower the term life insurance rates without any difficulty.

As the profit equals earned premium + investment income – incurred loss – underwriting expenses, the low term life insurance rates also help to make the carriers a huge profit. The more affordable term life insurance is, more people will buy it and more will be earned-premium. More is the earned-premium more will be the investment-income. With incurred loss (the amount paid as claims) being almost negligible the carriers make huge profit not only in spite of low rates, but also because of it.

However, it is most important that you buy your life insurance from a financially strong carrier. It must not become bankrupt under any circumstances. It is impossible for us to determine how healthy a company is. It is always better to rely on a reputed broker for that. They will not deal with financially unstable company because their business depends upon their goodwill. Buying life insurance through a broker also enables you to have multiple choices because they represent many companies. They also take up all the hassles on your behalf. Finding a reliable broker should be your priority now.