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I said this awhile ago in the Managing Your Portfolio board, and I'll offer the same two cents here, since there has been some recent discussion on what is the best insurance to buy.

IMHO, I like the odds the insurance companies are betting they won't have to pay off because I was careless enough to actually die. That's how they make their money. I would rather take all my insurance premium and invest it then use it to buy life insurance of any sort. Sure, that leaves you nekkid if that disaster occurs, and you may feel more comfortable with something like term life until your investments have grown to the value of that policy, but your investments will grow faster if you're investing all of your money rather than diluting some of it into insurance. I believe the same applies to health insurance--the odds against my being catastrophically sick don't support my spending any money on health insurance. Empirical data on the latter: my wife had two catastrophic surgeries last year that still cost us, in their aggregate, less out of pocket than the accumulated insurance premiums would have.

I think there are really two questions to answer on deciding whether anyone wants to buy insurance:

-what's your comfort level for living without insurance until your investments have grown to your proposed insurance policy level, in this society where you're taught that not only is insurance actually a government entitlement, but you have a personal obligation, as well, to pay money and own same;

-what, exactly, are you insuring: your mortgage so your spouse won't be left bereft if you die and the loan is called? College tuition? etc? If you do buy insurance (a personal choice, despite my attitude above), it certainly should not be for more than the total of those kinds of target coverages.

Again, just my thoughts

Eric Hines

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