Sounds like you are in a great position then. I would assume your estate planner is looking at your situation and seeing two possible tax problems. First, with your retirement income, you are loading up taxable income. The permanent can help by giving you tax free retirement income during retirement that can be their when you spend down your taxable income.
Secondly, the policy will be there when you die, that also eppreciates over time, which can greatly help with paying for estate taxes. The estate planner will know all about how to set these up.
Now, to answer your general question about permanent insurance in general, it is first and foremost a life insurance policy. However, it is also an extremely strong asset. Think of it like this, it is less risky than gov't bonds, is not exposed to market fluctuations, has guaranteed growth each year (positive continuous compounding). With an asset like that in your overall portfolio, it allows greater flexibility with your invested assets, and can allow you to keep yourself more aggressively invested for longer if you choose because you have a base to insure positive growth each year. Also, with the good policies, once your account is credited the cash value, it cannot go backwards, no matter what happens in the market.
With all that said, there is a ton of junk out in the market with this stuff, and a ton of terrible agents. I would talk to agents at Northwestern Mutual, New York Life, and Mass to look at policies. They each guarantee a floor of 4% on their traditional whole life, and have performed solidly over the years (around 6-9% tax free return over the past 3 years). Also, if you want to see a Northwestern policy, you have to speak with one of their reps, as they are the only ones who can sell their stuff. I cannot stand Universal Life, and I wouldn't suggest it for your situation. Just make sure you take everything the agents tell you with a grain of salt. Make them teach you about the policies, not just sell it to you.
Best of luck.
This post was edited on 10/11 at 9:03 am