While there are a few situations where whole/universal life insurance is appropriate, those situations are limited. In general, life insurance is just that: insurance. It is not an investment. Term insurance is a better bet for protecting your family and is much less expensive. The worst thing about universal life is that in case you die, the "cash value" of the policy is not paid to your beneficiaries--it goes back to the insurance company. If you want to invest outside of your 401k I would suggest a brokerage account.
Actually, whole life insurance can be a great aspect of your investment portfolio. Based on the company you choose, you get a guaranteed cash value greater than the premiums you paid, plus dividends, tax free withdrawal, as well as paid up insurance (we are all going to die so you pretty much always net out on top)
It's a great conservative investment that you can tap into for cash anytime. Ben Bernanke has about 1/3 of his assets in life insurance.
"The price of a commodity will never go to zero. When you invest in commodities futures, you're not buying a piece of paper that says you own an intangible piece of company that can go bankrupt "
It's difficult to get unbiased financial advice from a financial planner (insurance salesperson) that will make a commission on their recommendations. Most will show you projections on returns you will never see. Whole life insurance (it has many different names) is a useful tool for transferring wealth and avoiding estate taxes, but most people don't need it. OJ Simpson sheltered a ton of money in insurance policies. So, if you think you may face a huge civil suit it might be useful but there are other ways to shelter your assets. You can pay an hourly fee to a fee only Certified Financial Planner and receive unbiased advice. http://www.napfa.org/
