Question: I am a single, 40 year old woman, no dependents. I got a New England Life Insurance policy about 13 years ago - not for a payout if I die prematurely, but as a way to save money for retirement. I have someone who has been helping me invest my money for these past 13 yrs. but recently sought a second opinion. This second opinion wants to take my money out of my current company and put it with Northwestern Mutual Life. I will lose $286 in a transfer fee, which isn't a big deal if it is a smart move. I will also lose ground as I am now 40 and will be paying a higher 'mortality rate' (using the wrong term but I hope you know what I mean). The man who recommends this move says Northwestern Mutual is such a superior company that the long-run benefit will overcome the short-term loss. What should I do? Thanks - Marti, Chicago, IL

Answer: For most of us, the main reason to own life insurance is to financially protect a loved one from our untimely death. That's usually a child, but it can be a parent or a partner. (Life insurance also plays a critical role in the estate planning of the wealthy.) Although you're accumulating savings, life insurance is not an especially efficient or cost effective retirement plan. It pales next to a 401(k), 403(b), IRA, Roth-IRA and other retirement savings plans--or just building up savings in taxable accounts, a home, and other alternatives. There's no rush, but I would go through your finances and see how life insurance fits into your overall plan, and decide whether it makes sense for you to keep a policy or not. It's dated, but I still find it a useful introduction to the topic is "Smarter Insurance Solutions" (Bloomberg Personal Library) by Janet Bamford.

That said, I'm concerned about this specific proposed shift. Your concerns and questions are legitimate. New England Life is a good, reputable company. It has a AA/stable rating from Standard & Poor's, the rating agency. Northwestern Mutual is an excellent company with an even stronger balance sheet at AAA/stable. Still, New England Life is no fly-by-night operation. It has a blue-chip balance sheet. (If it didn't my advice would be different.) You've owned the policy long enough that you're now really getting the benefits of the savings component. My fear is that this shift is not to your financial benefit but to improve the commission earnings of the "second opinion".

That's my worry. One quick, cheap way to check out whether this move makes financial sense for you is to contact the Consumer Federation of America. It offers a life insurance evaluation service. You can find the details at here. The service helps insurance consumers decide whether to buy a cash value policy or term insurance, decide among two or more cash value policies, and whether an existing cash value policy is worth keeping. The cost for the analysis is $70 for the first illustration.