The complex structure and many uses of WL give its proponents an endless number of angles from which to sell it. Unfortunately, for nearly every use of WL, there is a better product to meet that need. If you need to protect your family prior to retirement, term-life insurance works better. If you actually need a permanent death benefit, guaranteed no-lapse universal life works better. If you need your money to grow, investments like stocks and real estate are likely to provide a much higher return. 529s work better than WL to pay for your children’s college, and saving up for your next car works better than purchasing a life-insurance policy to pay for it. If you need guaranteed income in retirement so you don’t run out of money before dying, you’re better off purchasing a single-premium immediate annuity (SPIA). Unlike life insurance, this product actually costs less as you get older and sicker.

Sometimes agents recommend you purchase WL to mix in with the other asset classes of your portfolio. They argue that because the projected long-term returns of WL are similar to those of bonds (especially in our current environment of historically low interest rates), you should include WL as an asset class in your portfolio. Keep in mind you can call anything, including horse manure or Beanie Babies, an asset class. The real question is, “Should I include this asset class in my portfolio?” With WL, the answer is usually no. If I offered you an asset class with the following characteristics, would you want to invest in it?

1. 50 percent front load the first year
2. Surrender penalties that last for years
3. Requires ongoing contributions for decades
4. Difficult to rebalance with other asset classes
5. Backed by the guarantees of a single company (and whatever you can get from a state guaranty association)
6. Requires you to pay interest to use your own money
7. Guaranteed negative returns for the first decade
8. Low returns (3–5 percent) even if you hold it for many decades
9. Must be held for life to provide even that low investment return
10. Excluded from the investment (or lower returns) for poor health or dangerous hobbies

Once you step back and think about the significant downsides of WL as an asset class, the right decision becomes obvious. Don’t mix investing and insurance. Complexity in financial products always benefits those who sell them more than those who buy them. According to joint reports from the Life Insurance Marketing and Research Association and the Society of Actuaries, 80–90 percent of WL policies are surrendered prior to death. This dire statistic suggests that the vast majority of WL purchase decisions eventually lead to serious regret.