Taxation – Even with the estate tax returning next year, the floor for taxation is still far higher than the estate of most folks.
Funeral costs – It is much better to just put a little extra aside during your life (say, using the difference between term and whole life premiums) and save for the funeral costs that way. Your term life can cover funeral costs during your productive years, and your savings can cover it during your retirement (after you have presumably let the term life lapse.)

Somebody that needs whole-life for taxation reasons is rather unlikely to need insurance to cover a funeral.

Yes, whole-life has some VERY limited situations in which it is appropriate, but far more people buy it than fit those situations.

@Steve: I apologize for the confusion, I was referring to the time period as Jason pointed out correctly.

Term policies are perfect for covering debt and fixed term needs, but if you need it for funeral costs or estate equalization you do not know the time frame it is needed for so a permanent policy would be the wise choice. Like I said previously term is sufficient for majority of the cases.

Anyway, I see Ray’s original points about estate equalization, etc. with the point being if you need to have assurance that a large tax-free payout will be available regardless of how old you are when you die, then a permanent life policy might make sense.

Steve, it seems like Ray is saying that it won’t be sufficient because term insurance is guaranteed to be there when you die (i.e you die in year 21 of a 20 year term policy). But I hear what you are saying – $500k is $500k!