I get strange looks sometimes when I say "whole life insurance can save your retirement". It sounds crazy to some people, but some of the best and brightest people use it for exactly that purpose.

Not everyone is suffering from the downturn in the financial markets. Old, large, mutual life insurance companies (as opposed to publicly traded life insurance companies) are weathering the storm and have even increased in value during the 2008 collapse of the financial markets.

The Federal Reserve, with roughly $4.5 billion in 401(k) assets hasn't seen the hardships that regular folks have in their 401(k) plans. Why? Whole life insurance. Yes, whole life insurance. While many people are down 20%, 30%, 40% or more this year…the folks at the Fed have been sheltered from most of the loss by being allowed to invest in stable-value life insurance products.

For most Americans, this is something that is out of bounds. According to author Barry Dyke:

This may come as a shock to most Americans as their 401(k) prohibits them from investing in whole life insurance products. That's OK, though. Most people don't need a 401(k), and they definitely don't need a 401(k) plan to put their money with a life insurance company.

Life insurance, is not often thought of as an investment…and to be fair, it isn't. With the FED's stable value fund paying 5.8%, it's not winning any performance awards, but it is saving employee's retirements. By using specially designed limited pay or "custom whole life", dividend paying whole life insurance and fixed interest annuity products, some Government, quasi-government, and private corporations are either completely unaffected or minimally affected by recessionary times (as far as their retirement savings is concerned).

As a vehicle to accommodate a large amount of savings, many Americans could benefit from this type of strategy. Save money first (using life insurance) and then start investing (if you are willing to learn how). That's the way it used to be done.

Which brings me to the next item in the news. Mr. Madoff. So many individuals are shocked over the Madoff case, and are calling for even more control over the financial markets by the SEC or worse, a new Government agency.

Perhaps what ought to be done is a little introspection by all those who invested with Mr. Madoff. Take personal responsibility for yourself and your investments. If you are not entering into a contractually guaranteed position (and even if you are), you should at least understand how the investment works as well as the basic fundamentals of investing.

So many Americans hand over their life's savings to a complete stranger and then expect their retirement to turn out just fine. When it doesn't, they blame everyone but themselves. Sure, it's easy to do that. It's easier to demand more Government controls rather than demand more personal responsibility from themselves. However, in the end, controls always necessitate further controls, violates others' individual rights (in this case, of their life, property and of free association).

Incidentally, for investors, increasing regulation never brings back the money that has been lost. It only burdens the financial markets, increases the cost of doing business, and makes it harder to recoup one's savings.