The 401(k) revolution has turned millions of American workers into their own pension plan managers. Now, as a growing number of these workers retire, they must convert their investment portfolios into regular income.

It isn’t easy. Retirees can’t depend upon bonds for income because yields are so low. But if they bet too big on equities, their savings could get savaged in a market downturn, crimping their retirement.

Enter whole life insurance. Whole life insurance has been derided for years because of high premiums and complexities. Buy cheaper term insurance and invest the rest, the conventional wisdom goes.

But a number of academics say that whole life, a form of permanent life insurance that builds cash value, can buttress investment portfolios and even boost retirement income if used correctly. They say that its stable growth allows consumers to pursue higher-risk, higher-return strategies with their other investments, while leaving more money to their heirs through the policy’s death benefit.

Comparing a 40-year-old who buys term insurance and makes a large 401(k) contribution with an identical worker who buys a $500,000 whole life policy and makes a smaller contribution to his 401(k). Because the worker with whole life is building cash value in his policy, he or she can safely allocate a higher percentage of the 401(k) to equities than the other worker.

The upshot: At age 65, the worker with the whole life policy has a 401(k) account that is equal in size to the other worker in a buoyant market and 17% smaller in a bad market. In either scenario, the worker with whole life comes out ahead because he has $210,000 in cash value that he can borrow against in retirement.

Retirees can use this money to avoid tapping their retirement portfolios during bear markets and don’t have to spend during any downturns.

If interested in buying a whole life policy, here are a few things to keep in mind
How whole life insurance works: When someone buys a whole life policy, they are buying both life insurance and a tax-free savings vehicle. Each year a growing part of the premium goes into the savings vehicle. The cash balance in it grows tax-free at an interest rate guaranteed by the insurer.

The best whole life insurance policies are sold by mutual companies since they have a long history of paying dividends to policyholders on top of the guarantees. The dividends end up increasing both the cash balance and death benefit. Companies such as Lafayette Life, which we represent, has a Comdex score of 96, which is a very high rating by a rating company for life insurance companies. Always buy whole life from a company with a very high Comdex rating.

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A client can tap the cash value by taking loans out against the policy.  The loans are tax-free and don’t have to be repaid, but reduce the death benefit heirs will receive.

Don’t wait too long to buy whole life: The sweet spot for buying whole life is from age 35 to 45. That gives plenty of time for the cash value to build up before retirement. In addition, people that age are unlikely to be rejected by the insurer because of health issues, and premiums are cheaper because insurers expect them to be around for a long time.

Buy whole life and term insurance: Because it contains a savings component and lasts for the entire life, whole life is far more expensive than term insurance, which provides a death benefit only for a certain period of time. That means if someone relies upon whole life for coverage, they may have trouble affording adequate insurance for their family.

The whole life policy will be in effect for entire life. The term insurance is for work life, and protects a family from the loss of income if the breadwinner dies.  As retirement nears, let the term insurance expire and keep the whole-life policy in place.

Pricing for whole life is opaque: If you have a customer who wants to buy term insurance, go to our term rater on the home page and quickly view quotes. The client may have to go through a health exam before getting the policy, but buying term insurance is simple and transparent.

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Whole life insurance is a complicated product, and a good agent should be able to explain all the nuances. There are three main financial variables: the size of the premium, the size of the death benefit, and how quickly it builds cash value.

If a client is concerned about the biggest possible death benefit for the smallest possible premium, insurers will sell a policy that does that but builds cash value slowly. If the goal is to build cash value as quickly as possible, the insurer will provide a policy with bigger premiums.

Whole life can help a client get more lucrative annuity payouts: In today’s world of low interest rates, some financial experts recommend that retirees buy lifetime income annuities to provide a bigger stream of retirement income. Married couples typically purchase joint survivorship annuities so the money will keep coming after the first death. Joint annuities, because they pay until the second spouse dies, have lower payout rates.

If someone has a whole life policy, they can responsibly buy a single-life annuity with a higher payout because they know the spouse will receive money from the whole life policy when the insured dies.

Universal life or variable life doesn’t offer the same protection: Insurers sell other permanent insurance products in which the cash value growth can fluctuate because of market conditions or how the insurer performs.

That makes them different propositions than whole life where interest and annual premium s are guaranteed by the insurer for the life of the policy.

If markets underperform or the insurer underperforms, such policies can lose value and even lapse in certain situations.

Whole life is insurance for market downturns: A whole life policy provides an emergency reserve to protect someone from having to sell assets during a down market like we experienced in 2008 and 2009.