Whole life is for suckers IMO, the sales pitch by twisting the numbers doesn't make any sense. Term is an off the shelf product designed to protect against sudden death, it's specific coverage. Get term, don't pay silly fees, invest in investment accounts and not in whole life, and you'll come out ahead in most instances.
Here is a good article pointing out why Whole Life is not for most of us:
https://momanddadmoney.com/why-whole-life-insurance-is-a-bad-investment/
#1 - Of course it isn't diversified - one one part of your own personal diversification. As I mentioned above, if all of your money was in the market (and pretty much in any market) in 2008, you were screwed. If 10-30% of your worth is in the cash value of the policy, and the other 70-90% is invested in the market or something similar, that's actually increasing your diversification, not decreasing it. As I've stated, it is a great alternative to money that would otherwise be in a CD or money market.
#2 - Returns aren't guaranteed. Neither are they anywhere else. As mentioned in the article, though, there is a minimum guaranteed return here - and you aren't getting that ANYWHERE else (outside of a CD or similar). I don't know the policy he was shown, but the minimum of many policies is between 2-4 and change percent (the policy is mandated by law to do at least that). Where are you getting that guarantee anywhere else?
#3 - Good returns take a relatively long time (now this is depending on the product of course). Just makes it more appropriate for younger folks, right? A 25 year old wouldn't be buying a whole life plan with the thought of great 5 or even 10 year returns.
#4 - Their #1 in here has nothing to do with liquidity, #2 doesn't apply to whole life (it applied to UL and VUL policies), #3 is only partially true (would take a while to explain, but you don't have to pay back interest if you don't want to).
#5 - Not true at all. I've stopped paying premiums on my own personal policy for years (when I bought my first house). The policy loaned it's own premium out of it's own cash value (took a loan against itself). You can't do that with term anyway, so why would it be a negative against whole life?!
#6 - The guy even contradicts himself here saying " So no, there
aren’t “taxes” applied those to loans ". I don't know what point he's trying to make. Yes, your death benefit will be net of any outstanding loans on the policy, but that only makes sense.
#7 - You think term policies don't have commissions, administrative fees, or cost of insurance? All of them, for either whole or term, are built into your premiums. There aren't additional fees.
#8 - Again, no one is saying to do a whole life policy and not also invest in other places. It's not a one or the other type situation. I think you're better diversified when you have both. 2008 (and really the first decade of the 2000's) proved that.