Q I am wondering if your position on whole life insurance has changed at all in light of the current credit crisis and ensuing market meltdown. Over the years, I have heard you and other financial experts discourage whole life and cash-value life insurance, and I generally would have to agree that it is a fairly bad investment. My wife and I own whole life policies, and we have close to $40,000 available to us that we can either leverage as a low-interest loan or take as straight cash value. I guess I'm feeling pretty good about having those whole life policies right now, glad that I've got some diversification there and access to money at a relatively low interest rate, considering the difficult lending market. Thoughts?

BRAD

A The whole life insurance policies you own are part of your financial safety net. That's good. And, while I'm not a big fan of whole life, it's a product that makes sense or at least works for some people.

Insurance is complicated, and whole life can be a critical component in an overall financial plan. That said, my overall opinion or starting point in evaluating life insurance hasn't changed.

For one thing, I think you're right when you say: "I generally would have to agree that it is a fairly bad investment." These insurance policies that include a savings vehicle are an expensive way to salt away money, with steep fees and commission costs. You could have taken your savings (the premium payments) and put it into a variety of other investments instead -- from certificates of deposit to equity index funds. You would have access to the savings, too.

For another, there's really only one truly important reason for buying life insurance: To protect your loved ones from your untimely death. For most people, that means term life insurance. It's a pure death benefit. The market is highly competitive, so premiums are cheap if you're in good health. It's a simple product that allows for extensive comparison shopping. So, yes, I still sing the "buy term and invest the difference" chorus.

Chris Farrell is economics editor for American Public Media's "Marketplace Money." Send questions to cfarrell@mpr.org, or to kaching@startribune.com. Put "Your Money" in the subject line.