It's not your entire portfolio, but it's a great part of the foundation for money that you never want to lose, but have access to. All the guys that pour all their money into a 401k or IRA may have the potential for a higher rate of return, but they have to ride the roller coaster in the stock market to get it and they can't ever touch that money before 59.5 or they will get penalized and have to pay taxes.

Permanent life insurance is the most maligned financial product on the planet. Mostly because of smarmy agents that sell it and set it up so they make a huge commission rather than helping their clients get a great financial vehicle. When set up for the benefit of the client, the commissions are dramatically reduced. That savings is what goes into the policy to help it get rolling quickly. Most agents are not willing to make that personal sacrifice for their client's benefit. That's a key.

While there is a cost to a Whole Life policy, the consistent rate of return (paid annually without interruption for over 100 years for the top policies) is a better rate than you'll find for a vehicle to stash some "safe" money. This is my preferred vehicle for Safe Money. People focus too much on the death benefits of a policy, when there are money living benefits that these types of policies offer. I use my policies to buy my cars and send my kids to college.

I set one up for each of my kids when they were in their early teens. I funded it with the amount I planned to spend for their college education. I did this over 5 years and then continued to pay the base premium, which was about $2000 per year per kid. I told the kids that it was their college fund. As a graduation present I would sign over the policy to them. If they could earn money or get scholarships to pay for school (learn the value of work and sacrifice) they would have more left over to help them get started in their life and career.

I've got a kid that's a junior at BYU that has only used about $1500 from his policy. I just got the annual statement and it's got $67k in it right now. By the time he graduates next year that policy will be worth close to $80k and all I did was set up a college tuition fund for about $50k total. He's getting married this summer and that policy gives him the resources to buy a home his first year out of school. If he and his wife can keep that policy alive by paying the $2200 premium each year for the rest of their lives, that policy will generate nearly $100k in tax-free income for them when he reaches 65. I'd call that a pretty good college fund. Compare that to any 529 plan.

My daughter who is serving a mission after a year at BYU has over $55k in her account and has used $10k for education related expenses. She can pay it back or just let it lapse and it's up to her. I paid for college. If she pays back what she borrowed from the policy (at whatever terms she decides) then she will have a similar retirement plan as her older brother. I love the fact that it's up to them.

My other son that used his policy graduated with nearly $40k in cash value after his college expenses. He used his to retire his wife's student loans. It's been a blessing to their family that has taken lots of stress out of the first few years of their working lives. You won't get that with Term insurance.

It's been a great vehicle for me and our family. There is something to be said about having some of your portfolio in a vehicle that won't ever go down in value, regardless of what the stock market does. My only regret is not discovering this 20 years sooner than I did.