Before you think about affordable life insurance you need to be clear on what life insurance means. Life insurance is primarily a contract between the person insured and the insurance provider to provide a lump sum or annuity to the beneficiary in the event of the early death of the person insured. There are various life insurance policies available such as whole life, endowment, and term life. Of these the most affordable is the term life insurance policy.

Affordable term life insurance is so because the beneficiary named by the policy holder gets the annuity only in the event of the policy holder's demise - otherwise no payment of any other nature is made. Other policies involve payment of some money when the insured person retires.

One way in which you can keep costs down when insuring yourself is to shop for insurance online. Here you can compare the various offers and choose what is best for you. Please keep in mind that the younger you are and the healthier you are the lower your premiums. The difference in premiums can be substantial as you age and if you are in poor health.

However, it makes sense to invest in a life insurance policy only if you have dependents. Such dependents can include a spouse, young children, and aged parents. If you have dependents calculate how much they will need to survive after you. There are many online calculators that can be used for this purpose. The primary costs incurred will be your funeral expenses, a readjustment fund, cost of child care, a retirement fund for your spouse, cost of educating your children, especially a college education fund. These can vary depending on your personal circumstances. For instance, if your spouse too is already working, you might not have to fund their retirement. However, if your spouse gave up their job to look after your young children, it is only fair that you contribute toward their retirement fund.

Another thing to be borne in mind is that a life insurance is a long-term investment. You cannot and should not trust your money with fly by the night operators. You need to investigate the life insurance provider and ensure that they will be around even when you are no longer around. For that is when your family needs them the most.

Insurance companies would usually insist upon a health check up. They may even ask your family history of diseases in wake of genetic ailments and shall inquire if you are a smoker. The presence of disease or smoking habit shall increase the premium. One more reason to give up smoking comes your way!

Above matter done with, the next hurdle is to deal with the premiums. The buyer has tow options here. He can either pay a single constant premium per annum or he may pay premiums that augment with age. Fixed premium will be cheaper in the long run; variable premium scheme can be selected if your present income is low but is likely to increase in the future years.

One more thing to be decided is the mode of payment of the insured sum to the beneficiary by the insured company. There can be a single payment of the accumulated amount or there may be an annuity. This depends on how financially smart your beneficiary is. For someone who can play the markets well, a lump sum would be a grand idea but for others, an annuity would be best.

One thing the buyer must be careful about is the payment of premiums on time. Life insurance validity is a function of your punctuality in the premium payment. A lapse would mean a policy renewal with the payment of a small fine. But it would also mean lack of insurance coverage in the interim period. This is something unwanted as it defies the entire purpose of life insurance. It is necessary that your life is covered with insurance every single day till your children mature and your retirement fund becomes enough.

The above discussed points must be considered during your quest for a life insurance company. You must look for a thoroughly reliable one. It is likely that such companies would charge higher premiums, but in the end it is worth it.