TikTok influencers are starting a new trend: promoting life insurance as the top retirement investment, beating out 401(k)s? Is this reasonable?

For example, if you pay premiums for 7 to 10 years, most of the premium goes toward the cost of providing the insurance. In addition, there are administrative expenses and agent commissions, and while you may not see them on your bill, it can be difficult to know exactly how much these commissions are. These commissions are not a one-time payment: You may have to continue paying for 7 to 10 years, or as long as the policy is in force.

The premiums you pay to cover your expenses don’t go into an account waiting for you to withdraw them. If you save in a 401(k) for ten years, you get to keep all that money, minus any fees and investment losses. With insurance products, only after ten years of paying monthly premiums (depending on your policy) do you actually start accumulating premiums and interest in the cash value account that the insurance company holds for you.

These interest percentages are lower than what you can earn in a high-yield savings account and are well below the stock market’s long-term average of 10% (not accounting for inflation).

Insurance policies also have significant surrender charges, which you’ll need to pay if you withdraw funds from your policy early. These charges are often so high that they can significantly reduce your policy’s net value in the first few years.

For example, if you try to take money out of your policy within the first two years, your surrender charges may be so high that there is little money left to take. These charges will eventually be reduced to zero, but that may take 10 to 16 years.

While 401(k)s do charge a 10% penalty if you withdraw money from your account before age 59 1/2, that 10% is likely much less than the surrender fee. Also, there are many exceptions to the 10% penalty on 401(k)s, including disability, the birth of a child, medical expenses and emergency personal expenses.

If you invest in the stock market through your 401(k), you won’t lose 10 years of your investment money due to insurance costs, and your management fees may be less than 1%.

“I don’t know how to support the idea that 401(k) fees are higher than insurance products as investments,” said Georgia Lee Hussey, a certified financial planner and founder of Modernist Financial, a wealth management firm in Portland, Oregon.

Insurance costs are complicated