Life insurance is a form of insurance on the life of a person. A sum of money is paid to the policy holder's nominated beneficiary when the person dies. An amount of premium is paid to the insurer by the person from the time of purchase of policy.


Cover and risk profile are the factors determining the premium amount for a policy. When you insure your life for a particular amount, that amount is termed as cover. Higher the cover, more the premium amount. To determine the risk profile of your life, you might be asked to provide personal information.


The factors determining the risk profile are your age, gender, your educational qualification and profession, your health and your parent's health, your hobbies, and habits. If your life is too risky by profession or by hobbies and habits, the premium amount is going to be high. If you have habits or profession that can risk your life, the risk profile is more and thus the premium too.


Upon the death of the policy holder, the insurance company decides to pay out the money to the nominee of the person. The nominated beneficiary would be asked to submit certain documents such as death certificate, document proving the identity of the person etc in order to get the pay out.


Many different types of insurance policy options are available. Amongst them, term insurance is the oldest. This type of coverage is used for protecting a key employee of a company. This is temporary and increasing. The increase in the income of employee, causes the increase in the annual premium amount.


If the person whose life is insured dies before the period of term insurance, money is paid out by the insurer to the beneficiary. The policy will be terminated if the person is alive at the end of the period. Also the policy coverage will be ceased.


Whole life insurance and participating policy options give you the option to get a return while the risk of your life is covered. The premium paid is more than enough to cover the risk. It is invested in policy reserves so the later premium amounts become lesser. In participating policy, the owner of the policy shares the risks and rewards of the policy with the insurer. Hence, he is entitled to get dividends from the insurance company.


Universal Life Insurance is another form of insurance. It is a blend of insurance coverage and an investment. You get guaranteed interests for the investment depending on the investment scheme you choose. This type of insurance plan allows you to surrender for cash, increase or decrease the premium, pay the premium when it is due or at any time, start or restart the policy at any point of time depending on certain terms. Also, you can insure multiple lives with one policy.


A life insurance policy shows your love and care for your family. The financial situation of your family after your demise is secured through policy coverage.