Date:  3 Apr 84 2146 EST (Tuesday)
From: Gary.Feldman@CMU-CS-A.ARPA
To: David Lamb <d-lamb@TARTAN>
Subject: Re: life insurance?
Message-Id: <03Apr84.214658.GF20@CMU-CS-A.ARPA>

I highly recommend reading "The Invisible Bankers" by Andrew Tobias.  Part
of it is historical (anecdotal and amusing), while the rest is analytic
and quite critical of the insurance industry.  (It's extreme, so you may
want to get an opposing viewpoint; I'm afraid I don't have any references
in that direction.)

The bottom line is this: basic term life is pure insurance policy; comparing
rates is easy.  Whole life, and the other new fangled policies are a 
combination insurance and savings plan; figuring out how much you're paying for
insurance and how much is savings can be complicated, as can comparing rates.
Recently, returns on insurance policies have started to approach market rates,
so they're not as bad a buy as they used to be.  Nevertheless, if you are the
sort of person who can save without needing a monthly reminder from someone,
you can probably do better managing your own savings plan, and only buying
term life.

The other point is that life insurance has one main purpose: to provide an
income for your family if you die.  Hence your insurance policy ought to be
enough so that, when combined with your savings, the annual interest is about
the same as a year's salary.  At current rates, and assuming no savings, 
that's at least $300K in insurance for the typical computer science.  
Mitigating that are savings (thus, you need less insurance as time goes on)
and Margaret's ability to earn an income.

   Gary