quote:

Whole life is both an insurance and a savings vehicle. The only question for me was "How does my rate of return from whole life compare to that of other investments? In my case, I earned much higher returns by investing the difference elsewhere.

Unfortunately, many people think whole life is the only form of permanent insurance... or insurance you own rather than rent for a term.

Long before I had an insurance license I purchased a 100K UL policy which would have covered my mortgage at the time. It was right after my wife and I had our first child and we bought our first house.

I asked the old-time agent if it was the best policy for me. His answer stuck with me:
"The best policy is the one that's in effect at the time of death."

The truth is that term is cheap when you are young, and expensive as you age and that term runs out. Most term policies are priced such as to not be in effect at the time of death, unless you die prematurely. If you no longer need or want insurance at the end of the term then it works out just fine.

Most people seem to not understand that they can get similar returns to other tax-deferred investment vehicles within the insurance wrapper. The insurance charges do go up over time, as you age, but the investments can go up more, depending on fund selection, of course.
Also, you only pay insurance on the difference between the face amount and the account value. So as the account value goes up, the amount you are actually insuring goes down.

When I had my first child at 29, I took out a 30-year term policy. When my 2nd child was born 3 years later I took out a 20-year term. I think each policy was for 250K and the cost was minimal - In the $160-$180 range annually for each. You could probably get a 500K 30-year non-smoker policy for $400 a year. (assuming you are in good health)