Will there people even get a whole life insurance and mid of way change to term and cash out their cash value of life insurance to do it for investment?

Of course there are such people, there are all kinds of people.

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This will only make sense provide:

1) They continue to be insurable.

2) They don't need permanent life long insurance, which most people will need. Since we are likely to get sicker as we get older.

3) They have very good investment skills. Unfortunately, many people imagine themselves to be better than what they really are, in this area. Even professional investment people find it very challenging to invest, cannot imagine how would someone without proper training (not those 3 days week end type), without professional experience and support, busy with a day job in another industry, to do better than the professional.

Hi anon,

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I would not recommend doing that unless there are valid reasons to do so.

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You have to be insurable still to buy a term policy, and even then, the compounding effect of the cash value of the whole life policy is something you'll lose. This compounding effect is a slow but steady way of growing returns. Sure, the markets have been bullish for some time now, but we never know when the next crash is coming.

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In life, diversify. Invest if you must, but not at the expense of turning your insurance portfolio upside down. If your needs dictate that you require the whole life cover, then keep the whole life. Don't drop it just because you 'think' you can do better at growing the monies. The insurers are on 65/35 bond/equity portfolios so naturally you cannot expect outsized returns on the cash value.

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The only time I would cash out is if I don't need the coverage any more, but that usually applies to plans that only have a death benefit and only at a point where I have no liabilities or dependents to worry about. I can then take the cash value to spend for my retirement.