Its definitely not life insurance. In life insurance, none of the money belongs to you. Life insurance is a tool to provide income to your family in case you die, not as a savings tool to save for long term goals. If you ever needed to take money out, you have to borrow it and pay loan interest of 6-8%. If you die someday, the insurance company keeps your savings and pay only the death benefit to your beneficiary.
In mutual funds, you have professional money managers to manage your money. They take your investment and they decide what companies to invest in. If you ever want to take money out, you just need to make a call (or do it online) and within 7 days, you will get your money. You don't need to put this money back because its your own money. Mutual funds has historically earn an average rate of return of 10% in the past 80 years.
In summary, life insurance provides no profit to you. Everything is paid at a loss because the premiums you pay is higher than what you earn in your savings. And this loss is not tax-deductible. In mutual funds, the money is yours and there is various mutual funds out there that can fit your investment objectivies.
Source: http://www.lifeinsuranceadvisor.co.uk/over-50s-cover
Life insurance policies that grow a cash value over time generally are not a very good investment. The policy's value is pennies on the dollar for money you put in. One type of cash value insurance is worth considering though. This is single premium life insurance which can be a good investment for certain investors. With this you pay a lump sum to buy life insurance that guarantees at least a minimum survivor's benefit for the rest of your life. Within the account your funds will be invested (usually in mutual funds) with the dividends paying your premiums as well as accruing value themselves. You can usually borrow against your insurance policy's equity and you can make withdrawals for certain expenses but naturally if you withdraw funds this will reduce the benefit your survivors receive. Your investments grow tax-deferred and when you do pass your beneficiaries will receive their benefits income tax free and without having to go through probate.
