I took out a whole life insurance pollicy in 1995 which I thought was a way to save for retirement. The premium is $882 QUARTERLY for 200,000 death benefit. We can no longer afford to pay that and plan to cancel. Cash value is under $400, but more than 35,000 has been paid into it. They say that is the "cost of insurance" Reducing the death benefit to 100,000 means a quarterly premium of $972. We seem to be out of options... any advice?

You're 14 years older than when the first policy was taken out hence the higher quarterly premium on the reduced payout benefit. A whole life policy is not a retirement policy. It is a life insurance policy that you pay each year and don't get your money back like car insurance. It does accrue some sort of cash value but that value is usually negligible. Some salesman obviously did not properly explain a whole life policy as they are the most expensive you can buy.

You may wish to look into term life insurance as it is much cheaper. The more insurance you want to take more than likely you will have to take a quick medical exam (paid by the insurance company). You can get a 20 year term for less than the policy you have now for the same amount. The reason they call it term is because it is for so many years and then if you haven't used it (as in died) you don't get any money back but you did have the cheaper rates per year that you locked in at the beginning of the policy. Term insurance is the cheapest life insurance policy you can buy. Look into 30 year term and 20 year term as 10 year term rates are higher.

You should have several things I the plan.

1. a amount of paid up life insurance if you stop paying. It will be listed in options.
You have to do it officially not just stop paying

2. you can convert some over to term insurance.

Whole life is not a investment, it will at the end of the plan have more money than you paid, but it is not a retirement plan

A universal life policy would have been better but even it is not a good plan for retirement.

What is much better, a term policy for the amount of insurance you really need, and put the rest of the premium into a IRA or other tax perfered plan