Well, you guys are in the vast minority from what I have encountered. Americans had a negative savings rate in 2007, so on average how could most people "invest the difference" when they were spending more than they were earning? Most of the people making posts on this forum are asking about how to pay off all their debts, and they aren't saving very much. When we give advice, sometimes that advice is good for us because we are good with our money, but not everyone is good with their money or there would not be forums like this one.
Steve, you are doing it exactly right...reduce your coverage as you no longer need it. And, Term insurance is absolutely the right type of insurance for short term needs. You seem to like to do numbers....get your insurance agent to give you a quote for Term insurance at the age you bought insurance and then a whole life quote for the same age. Do a comparison of buy Term invest the difference vs Whole life and determine where the cross over point is. Be sure to take into account taxation on the "invest the difference" part. You assume you surrender the policy and the "invest the difference account at the end of each year. Assume whatever return you want, but if you are going to assume equity type returns on the invest the difference part, you should assume the same returns on the whole life part as that could be invested in equities too. I think you are going to be surprised at how soon the cross over occurs. It is probably going to be in the 12 year range. It was about 10 years back when I was doing it.
One of the reasons I got out of the life insurance business is because I got tired of fighting with this age old argument. There is no one policy that fits everyone's situation. Whole life insurance was not designed solely so an agent and the insurance company can make a lot of money. Sure they are in the business to make money, just like every one of us who have a business or job. Many people think doctors make too much money, but that doesn't mean every doctor is bad, does it, Steve? Sure there are bad insurance guys, but the good ones are trying to determine what is the best policy for the client. I used to know a ton of them.
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