Why have I often heard Whole Life Policies are a bad investment?

A better strategy would have been to purchase twenty year level TERM insurance for a fraction of the cost of whole life, and invested the difference.

Whole Life policies are a bad investment because the rate of return is so poor (over the long term) compared with even more conservative stock market (mutual fund) investments.

Almost any strategy would have been better.

For example, 20 years ago, long-term interest rates were close to 10%. Even passbook savings accounts were earning over 5%. If you had put the money into a CD at the bank, the value would have taken only a few years to go up as much as took 20 years with the life insurance.

In a diversified investment in the stock market (such as an S&P 500 index fund), it would have gone up several hundred or even thousand percent. Just during Bill Clinton's second term (four years out of the twenty), it would have gone up several times as much as the life insurance did in 20 years.

Gold

Corporate bonds

Municipal bonds

U.S. Treasury bonds

I think it would be faster to list the strategies that would have been worse. Lottery tickets. Burning the money. Keeping it in actual cash under the mattress. That's pretty much the whole list.

Only time I tell people to keep their whole life policies is when you have already had them a long time. It takes that long for them to finally start paying off, especially if they are earning dividends.

Bad investment because if you withdraw the money you have a loan against the policy which reduces the death benefit . And you have to pay interest on the loan or if you don't pay the interest you could end up losing the policy.

Bad investment, but when you have the policy this long, it is worth keeping. (Most of the time, I have not reviewed your policy so can not say for sure. This is just what I have seen most of the time.)

With some whole life policies you pay in more than you get out.