Whole life policy

Dear Mr Tan,
Your blog has mentioned so much about buy term invest the difference.

When I ask my friends and co-workers, most of them buy whole life policies and want to surrender the policy when they retire. Some said that the cash value will be reduced after age 65 and it will be better to surrender it. Why is this so? Is this defeat the purpose of having whole life insurance?

Is this the reason why you want to educate people to buy term insurance till age 65 and invest the difference? They can avoid the high distribution charges (at least 15 months of premium) and get a better return on their savings by investing in low cost funds, such as ETFs, unit trusts from online distributers?

REPLY
The sum assured under a whole life policy should continue at the same level, provided that the premium continue to be paid yearly. If the policyholder decide to stop the premium after age 65, the sum assured will be reduced.

A term insurance plan provides high coverage at low cost. The savings should be invested in a low cost investment fund to get a good return.