Life insurance is designed to replace your income stream should you die, so that your dependents will be able to maintain a normal standard of living. Life insurance is not, I repeat not designed to fund your retirement or pay your child's college education. In fact, the single worst reason to buy life insurance is as an investment.

Now, I know your friendly neighborhood insurance agent will try to convince you otherwise. He'll show you lovely projection tables with lots of zeros to show how your "cash value" will grow. He'll promise you the benefits of protection and savings, He'll sweet talk you into believing it's "really the best thing you can do for yourself and your family".

Don't believe it! First of all, those lovely projections are just that - projections. They are based on assumptions of investment returns - not guarantees. And if you look a little closer, you'll see that those beautiful zeros in your cash value account don't start showing up until many years (like10) after you've been paying premiums. Sure you may have built up a cash value account worth $190,000 but that's after you've shelled out $156,000 in premiums! That's about a 2 percent average annual return, not even better than a money market fund.

The bottom line is life insurance should be bought for protection, not for savings. There are many good investments out there to build a nest egg: life insurance isn't one of them.

The Second Worst Reason to buy life insurance is for the purpose of guaranteeing your insurability. Insurance agents love to use this rationale "You may not be able to get insurance in the future, you know" they say "so you better buy a permanent policy now while you still qualify... After all, you could contact a horrible disease that renders you uninsurable".

Well sure that's true. But you could also become fabulously successful, marry a fully self-supporting spouse, and never have any children and you wouldn't even need life insurance. The kind of logic the "guarantee your insurability" strategy is based on ranks right up there with reserving a date for your teenage daughters wedding reception 10 years into the future. Sure the place gets booked months - even years - in advance, but that's no reason to reserve it for an event that may never happen! You wouldn't even think of doing that. Yet its surprising how many people get talked into buying some type of permanent life insurance based on this same logic (of course, the insurance agent is usually such a good salesman, the way he presents it makes it seem perfectly logical). I say buy life insurance on your needs today. Worry about the future when it happens.