Whole Life Most Popular?

Dave discusses why any kind of life insurance - besides term - is a horrible idea.

QUESTION: Dave reads an article in CBS Marketwatch about universal life insurance policies. The article says:

Universal life insurance policies (cash value policies), which have a no-lapse guarantee, have taken over variable annuities as the most popular life insurance plan.  Traditional universal life policies lapse if a policy holder doesn’t keep up with premium payments, these new policies guarantee that the policy will remain in affect without regular payments.  (The guarantee means customers are paying a huge lump sum up front.)  

This policy and the ability of these companies to make these guarantees has been called into question by several organizations.  Insurance companies aren’t funding their reserves enough to make these guarantees and pay future liabilities.

ANSWER: This shouldn’t mean much to you because you’re not going to buy cash-value life insurance.  Investment-type life insurance is never a good deal.

You need to buy investments in good growth stock mutual funds – not in an insurance plan.  When you buy insurance, just buy insurance, particularly 20- or 30-year term life insurance.