Life insurance - past and today

I have been asked many times about why I find life insurance policies to be a bad investment, when I had been selling life insurance for 30 years.

The life insurance policies sold during my time gave a yield of about 5% per annum. The expenses were low and high rates of bonuses were distributed to the policyholders. This was an attractive yield.

Today, the yield for most policies is about 2.5% per annum. This is unattractive when it is possible for the consumer to earn more than 4% per annum from other types of investments, e.g. in an index fund or exchange traded fund.

If you can find a life insurance policy that gives a yield of 4% per annum today, it is all right. But 2.5% is too low.