Does it ever make sense to purchase whole life insurance? In general, I don’t think so.
Whole life insurance combines two products into one: life insurance and a tax-deferred investment account. The result, in my experience, is that whole life policyholders end up paying more than necessary for too little coverage.
But there are a few limited cases in which whole life insurance can make sense. The clearest example, in my opinion, is a privately-owned business. In that situation, whole life insurance could be used to pay estate taxes. Or in the case of a partnership, a whole life policy could fund the buyout if one partner dies.
But aside from those narrow uses, I think the benefits of whole life insurance are oversold.
