A random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing

part of the insurance premiums that goes into the savings
plan accumulate tax-free, and this can be advantageous for
some individuals who have maxed out on their tax-deferred
retirement savings plans. Moreover, individuals who will not

---

save regularly may find that the periodic premium bills
provide the discipline necessary for them to make sure that a
certain amount will be available for their families if they die
and that a cash value builds up on the investment part of the
program. But policies of this kind provide the most
advantages for the insurance agent who sells them and who
collects high sales charges. Early premiums go mainly for
sales commissions and other overhead rather than for buildup
of cash value. Thus, not all your money goes to work. For
most people, I therefore favor the do-it-yourself approach.
Buy term insurance for protection and invest the difference
yourself in a tax-deferred retirement plan. The
recommendations that follow will provide an investment plan
that is far superior to that available from “whole life” or
“variable life” insurance policies.
My advice is to buy renewable term insurance; you can
keep renewing your policy without the need for a physical
examination. So-called decreasing term insurance, renewable
for progressively lower amounts, should suit many families
best, because as time passes (and the children and family
resources grow), the need for protection usually diminishes.
You should understand, however, that term-insurance

---

premiums escalate sharply when you reach the age of sixty or
seventy or higher. If you still need insurance at that point,
you will find that term insurance has become prohibitively
expensive. But the major risk at that point is not premature
death; it is that you will live too long and outlive your assets.
You can increase those assets more effectively by buying
term insurance and investing the money you save yourself.
Shop around for the best deal. There is considerable
variation in insurance company rates. Use telephone quote
services or the Internet to ensure that you are getting the best
deal. For example, you can go to www.term4sale.com. Enter
your zip code, and you will be able to see a number of
alternative policies at varying prices. You do not need an
insurance agent. Policies available from agents will be more
expensive since they need to include extra premiums to pay
the agent’s sales commission. You can get a much better deal
by doing it yourself.
Do not buy insurance from any company with an A. M.
Best rating of less than A. A lower premium will not
compensate you for taking any risk that your insurance
company will get into financial difficulty and be unable to
pay its claims. Don’t bet your life on a poorly capitalized

---

insurance carrier.
You can obtain A. M. Best’s ratings of insurance
companies by calling 908-439-2200. Insurance companies
pay Best for the ratings. A somewhat more objective and
critical rating is offered by Weiss Research, a consumer-
supported company, which can be contacted at 877-925-
4833.