[Houyhnhnm]

Someone posted a question about whole life vs. term and someone claimed they could prove whole life had equal or better return than buying term and investing the difference in the stock market but the question was closed before the answer was completed. Here's another chance for the whole-life apologists. My contention is that high fees and commissions on whole life will overwhelm any investment advantage. I also want to see this demonstrated for middle-class people, not multi-millionaires who get huge benefits from tax shelters.Assumptions:20% marginal income tax rate (15% federal, 5% state)Buying insurance at age 30 and stopping/cashing out at 65Stock market return is 10% per year and profits are taxed each year at long-term capital gains tax rate.Difference in premiums invested at start of each year.Reasonable amount of insurance coverage--$100,000, or $250,000 or so, not several million.Any advertisements or links to scams will be reported for abuse.Like I expected, the whole-life apologists are attacking my assumptions. First, that I shouldn't end the policy at 65. I'm assuming my kids are grown then, and surviving spouse will have Social Security (maybe), a home, and other assets to survive on. If it's more beneficial to convert the policy to an annuity at 65 and save taxes on my (presumably reduced) income, I will consider that possibility, just give me some facts.Someone said dividends are taxed at a higher rate than long-term capital gains, but I think that's wrong. Regardless, the rates on either are pretty low and I don't see that as a major factor.Someone else said term insurance would be a loser if my health failed before 65. If that's the case then I'll admit I'm comparing apples and oranges. Is there term insurance that doesn't expire as long as you pay the premiums, or does term insurance mean you'll lose coverage at the first sign that you're odds of collecting are higher than average?

[L5tc]

The only reason for whole life for some people vs term was for estate planning or someone who wanted to carry a policy their whole life. But with the advent of the guaranteed UL's the cost of which is about 1/3 the premium of Whole Life I don't use whole life. I wish I cold justify it it's a much higher commission but I can't and the estate lawyers know it by the way.

I still use whole life for retirement planning for people who have maxed out their retirement plans and want to sock away extra cash - and then take the tax free distributions later on. But this only works for people in their early to mid 40's. When they're older there isn't enough time to compound the cash in the policy to make it worth while.

I don't like the idea of these huge piles of cash in Whole Life policies - the client is self-insuring themselves. As for the idiotic notion of these cash policies offering "an exit strategy" ( I was taught that at NY LIfe) it's a bunch of crap. The only people who cash out of these policies couldn't afford them in the first place. If it's whole life and its estate planning then they don't want to access the cash. Hardly ever have I have seen that. Remember you paid 3x the cost of a guaranteed UL to have all this cash. It doesn't come from nowhere