Why buy life insurance?

1. If life insurance companies are highly profitable, most people will lose money on their investments, right?

2. Wouldn't it be smarter to save money in tax deferred accounts and create a will with the beneficiarie(s)?

People with families and a shortfall of income will buy life insurance. A majority of families don't have lots of money save or hardly anything saved, so life insurance can ease your mind about what would happen to your family in case you die?

The problem with life insurance that there are so many different kinds of it that the public has no clue on how they work. They will buy into whatever the life insurance agent will say. In effort to avoid these confusion, I created a blog that talks about life insurance (and other stuff) at: http://obe231.blogspot.com Many life insurance agents would like to find me and beat me up for bringing out the truth. What they should be doing is do the right thing for the client.

Yes it would be smart to save money in tax deferred accounts. The problem is that it takes a long time to build.

So, I recommend to my clients to buy term and invest their money in Roth IRA (if they qualify for it. I can't wait until 2010 when everyone can get a Roth IRA!). I also offer prepaid legal services that cost around $20/month and the client can get a Will done for free. Whatever they do with the prepaid legal after that is up to them (i think most of them got rid of it after getting their Will done. lol).

Whole life, universal life, and variable life steals your cash value when you die. And if you want to use it, you have to borrow it and owe 5-8% interest on it!

Buy Term And invest the difference into Traditional/Roth IRA, both grow tax-deferred and have higher rate of return than cash value! Report It

insurance.... the biggest scam ever invented

most people cant save that kind of money, it's easier for them to pay a little each month. and with funeral costs going up a nice policy can cover that. ALSO take into consideration who is being left behind and if they are capabil of fending for themselves after the person who makes all the money in the house passes away...

IT IS ACTUALLY DEATH INSURANCE.

what if you die in the first few years?

If you are a diligent investor, buy term and invest the difference. You can re-evaluate at a later time when your investments have built up.