Dave says: Advice on retirement and life insurance.

Return of premium?

Dear Dave,

I’m thinking about signing up for a return of premium life insurance policy. It costs more per month than other policies, but it allows you to get all your money back after 30 years, assuming you live that long. Is this too good to be true? 

—Tommy

Dear Tommy,

It’s not too good to be true, but it is a ripoff. Never buy a return of premium life insurance policy.

You said it costs more than other policies, right? Well, 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 just a gimmick.

When it comes to life insurance, always go with a good, 15- to 20-year level term policy. And always stay away from that return of premium garbage!  

—Dave