The Radical Guide to Life Insurance: Why cash value is a bad idea

Expensive. Cash-value life insurance policies are expensive. If you are young you probably want to avoid permanent life. Statistics show that an overwhelming majority of young consumers are forced to dissolve their cash value policies after a couple of years for failure to cover high premium payments.

Better tax-advantaged savings options. Permanent life insurance policies typically require significant up-front costs associated with setting up your cash value account, investing your money, and paying the insurance agent's commission. So while tax sheltered savings is appealing, you are already starting out at a significant disadvantage to other investment opportunities due to high upfront costs. Therefore, consider alternative investment vehicles such as no-load investment funds or any one of the many tax sheltered savings plans accessible to the American consumer. They might just prove a better option.

Investment options are limited. As mentioned earlier, cash value policies have a cash value investment portion. But cash value investment options are often limited. Variable life policies typically offer only certain types of index funds, and rarely the option to buy individual stocks. With an endless number of investment vehicles at your disposal, cash value policy limitations make it a less than appealing option.

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