Academics counter “buy term and invest the difference.”

When people consider buying life insurance, they are likely to hear the phrase, “buy term and invest the difference” (BTID), as they research various options. The decision whether or not to follow that advice, or something similar, is among the most challenging elements of buying life insurance.

In his “Buy Term and Invest the Difference Revisited,” published in the Journal of Financial Service Professionals, Professor David Babbel (The Wharton School, University of Pennsylvania), demonstrates that one approach cannot be claimed to be the best for all consumers. This may be especially true for those who lack the financial discipline necessary to successfully implement the BTID approach.

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