Guest post: Tips on Switching to a Term Life Insurance Policy

by hedy on January 25, 2014

How to find life insurance in the internet age
Getting life insurance coverage is one of the most important financial decisions you can make. As you may know, there are two basic types of life insurance coverage: term life insurance and whole life insurance. The way the policies work is inherent in the names: a term life insurance policy covers you for a specific term or time period, while a whole life insurance policy covers you for your whole life.

There are pros and cons to both types of coverage. If you pass away after your life insurance term is up, you will not get covered. With whole life insurance, you will get coverage that will last for the rest of your life. You can also get access to an investment component as part of the life insurance coverage, and that money can be used by you when you are still alive.

However, that full coverage comes at a price – generally speaking, whole life insurance is more expensive than term life insurance. So you may want to switch from a whole life insurance policy to a term life insurance policy, and invest the money that you are saving yourself in your own investments. Here are some tips on how to do so:

Figure out how many years of coverage you need, and how big your coverage should be

One rule of thumb is to buy a life insurance policy worth 7 to 10 times your annual salary when it comes to buying a new policy. Another rule of thumb is to buy enough years until you are effectively “self-insured” – have no debts, a paid-for home, and enough money for final expenses, and for your loved ones to be okay financially without your income. Or you can check out this life insurance calculator to figure out how much you should get for your coverage.

Do not give up your whole life insurance policy coverage until…

If you want to switch to term life insurance, it is important that you do not have a lapse in coverage. That means not cancelling your whole life policy until the new one is signed, sealed and delivered. You could potentially die in a freak accident during that lapse in coverage. It is not enough to have a life insurance quote from a term life company, or to be in the process of switching – make sure the policy is in place before cancelling it.

Shop online for the best rate

When you go to buy a term life insurance policy, your best chance on finding a competitively priced rate is online. You can compare rates from multiple companies at the click of a mouse, and quickly find a life insurance company that can offer you rates that will fit you and your life.  Shopping online is the way to go these days for so many things, and that includes term life insurance. To learn more about term life insurance, and how to buy it, click here.

Lisa Swan writes for a variety of life insurance sites.

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