(MONEY Magazine) – Life insurance agents and financial planners have come up with this novel pitch to peddle policies: Use the tax-shelter benefits of your coverage to build your own private pension plan. They explain that if you, say, salt away $1,000 a month or more for 20 years into a universal or variable life insurance policy, the investment portion of the policy -- the cash value -- would grow by as much as 12% a year. Then, when you need income for / retirement, you could stop paying premiums, withdraw what you've paid in and begin borrowing against the policy through the insurer's low- or no-cost loans, which don't have to be repaid. The outstanding loan balance and any interest would be deducted from the death benefit when you die. And, the salesmen add, the loan proceeds escape income taxes. Sounds good. But these private pension pitches can be dangerously misleading. "In the real world, you're taking on a lot of risk," says Mark White, president of Direct Insurance Services, a San Diego-based insurance agency. If interest rates drop -- or, in the case of variable life, if the stock market falls -- so would the policy's return. Then your pile for retirement might never materialize. The tax-free loans could also backfire, since borrowing big could so erode the cash value that you would have to pay more premiums just to keep the policy in force. If the policy lapses, all loans in excess of the premiums you've paid plus any remaining cash value in the policy would become taxable. So if you plowed in $12,000 a year for 20 years, then borrowed $40,000 annually for 20 years, and the policy lapsed, you would owe taxes on at least $560,000 -- a $156,800 bill for someone in the 28% tax bracket. Our advice: Pass on the private pension pitch and stash your retirement savings in tax-sheltered IRAs, 401(k)s and variable annuities.