In my 30 years being in the financial services business (including 17 years in the insurance business, left the business in 1996) I have never met a single person who bought Term and truly invested the difference. I've never met someone who said "and here is my investment account that I have built up from the savings between the Term and whole life premiums". On the other hand, I have met MANY people who reach retirement and the only savings they have are their retirement plans and the cash value of life insurance. The books may say "term and invest the difference" is better, but that is not reality. Come on guys, how many of you truly set up a separate account and invested the difference. Most people buy life insurance because the don't have enough savings to provide for their families the way they want. This is usually when they have kids and have a terrible time saving money.
Most people buy Term because that is all they can afford. And, if that is all you can afford, then by all means, by Term. When buying insurance, you should make 3 decisions: 1) How much insurance do you need, 2) how long do you need the insurance, and 3) how much is your budget for life insurance. Those were the questions I would ask before I would come up with a recommendation for what type of insurance to place a client in. Many times, their budget dictated that Term was all they could afford to buy, even though it wasn't always the best product to buy.
Never buy life insurance as a "retirement funding vehicle". Buy it because you need life insurance. The cash value can be used like an emergency fund, but its main purpose should be for life insurance.
I've done the numbers on buy Term invest the difference vs. Whole Life and there is a cross over point. The rate of return in each determines that. If you invested the difference in the stock market over the last 10 years, then someone with a non-variable whole life policy most likely smoked you.
I've said this in another thread, but if you need to keep your term policy after the initial guarantee period, then you better get ready to pucker as the premium skyrockets unless you are healthy and can reapply. It doesn't take much to make you uninsurable, by the way.
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