Most people buy life insurance to provide for their loved ones in the event of their death. The payout can be used by the beneficiary to replace the person's income and help pay the funeral expenses. Life insurance can also be used as an investment vehicle. This type of policy is called a whole life policy. The policy holder pays a monthly premium to the insurance company. Part of that money goes towards insuring against the person's death. The rest is invested in a fund. Over time, the fund grows in value. You can cash it out, or borrow money against it.
Overfunding a life insurance policy means paying the maximum premium each month. In doing so, you inflate the cash value of the policy. It's possible to raise the value of the policy enough so you can make regular withdrawals and still protect your family in the event of your death. Some people do this so they can have an income during their retirement.
One of the benefits of using an insurance policy in this way is that the money is protected from most creditors. There are also some tax deferral advantages.
The main question to ask yourself is whether or not you need the life insurance component of the policy. If you don't have any dependents, you may not need life insurance at all. In that case, you'd be throwing away that part of the money. There are better long-term investment options than life insurance, where not some but all of your money will be invested in the fund.
Overfunding may be a good option for older people, who haven't saved up enough to have a decent income after retirement. However, if you're young and have no children, there are many other investment opportunities that could be a better fit.