Did you know that as much as 100% of your first year's life insurance premium goes to the insurance salesperson?! Maybe that's why so many life insurance agents are urging folks with a cash-value policy to switch to another policy--they get a fat, juicy commission on the new policy they sell you.

No wonder you can't get most salesmen to give it to you straight. Here's how to decide for yourself if it makes sense to switch life insurance policies.

There are 3 reasons you should consider switching from your whole-life or cash-value life insurance policy to a term policy:

1. You can't afford your premium payments. $500,000 worth of whole-life insurance for a 35-year-old non-smoking male can cost a whopping $3,000 per year or more. You can buy the same amount of term insurance (level premium, 10-year policy) for just $600 per year!

2. You don't have enough coverage and can't afford to add more coverage to your cash-value policy. As a general rule of thumb, you should purchase insurance equal to six-to-eight times the gross annual income of the major breadwinner in your family and one-half that amount for your spouse. Consider using term insurance for the additional insurance that you need.

3. Your insurance company is financially weak. Call TheStreet.com Ratings once a year (800/289-9222; $14 per company) to be sure your insurance company is financially strong. If it's rated below a "C," consider moving to a company on better financial footing.

If you do switch policies, be sure you consider a 1035 tax-free swap. Why pay more taxes than you need to?

Here are the requirements you need to meet to make the swap without paying taxes as you close out your cash-value policy:

• The same person must own the new and the old policy. You can't, for example, exchange a policy that you've put in your child's name for one to be held in your name.
• The same person must be insured by the new and old policy.
• Once you have your new policy in place, you must "assign" (which means sign over) the old policy to the new insurance company. The new company then exchanges the old policy for the new one. Be careful, you can't cash in your old policy and give the new company the check you received. Make sure you talk to the agent handling your new policy to be sure this is handled properly.

A final word of advice: Don't cancel your current policy until the replacement policy is in force … you want to be sure you have coverage.

And stay tuned! We'll be talking much more about life insurance here in Straight Talk. We'll walk you step-by-step through the process of finding the best life insurance policy for your needs.

Don't lose any money to insurance companies' sneaky methods! Check out our articles on how to protect yourself:

• Life Insurance Sales Tactics
• Why We (Generally) Hate Cash-Value Insurance Policies
• Four Biggest and Costliest Life Insurance Mistakes