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Ask Dave

Return of premium? Nope!

Is return of premium life insurance too good to be true? Nope, it's a rip off. Dave gives Tommy some good advice.

QUESTION: Tommy is thinking about buying a return of premium life insurance policy, and he asks Dave if they’re too good to be true.

ANSWER: It’s not too good to be true, Tommy. It’s a rip off. Never do return of premium policies.

If you were to take that extra money you’d be paying and put it into a good mutual fund, you’d get all the cost of your policy back after 30 years 100 percent of the time. Return of premium policies are completely an insurance gimmick. They’re crap.

When it comes to life insurance, always go with a good, 15- to 20-year level term policy. And always avoid return of premium. That’s the deal.