Q: How do I know my iPhone is Unlocked?

You would either purchase it as unlocked from an authorized seller or you would have the carrier to which it is locked unlock it (you would then follow the directions they give you to compete the unlock).

1. Try SIM cards from different carriers.

2. Call AppleCare with the serial number.

You can check by IMEI lookup:  http://forums.macrumors.com/showthread.php?t=1399951

If you recently unlocked your iPhone, it will only be unlocked after a full factory restore (if it was locked to a provider previously).  In my case, I had to complete the steps outlined by Apple:  http://support.apple.com/kb/HT5014

I never received the confirmation message in iTunes, so I followed steps in this thread:  http://apple.stackexchange.com/a/66153/57915

Overall:

1 - Pay for unlock with provider

2 - Wait ~7 days after confirmation

3 - Confirm unlocked status

4 - Backup phone, photos, and important data

5 - Factory Restore (remove SIM first)

6 - When requested, insert new SIM (if possible) then reconnect to iTunes

7 - Message should appear in iTunes

8 - Restore from backup

Three methods to verify if an iphone is unlocked: http://www.wikihow.com/Check-if-Your-iPhone-Is-Unlocked