In 1982, my grandfather responded to a letter from “Dave,” asking him to dispense some of his knowledge on monetary matters (Dear Dave – Part 1).  The following discourse on life insurance is a portion of his response.

Life insurance should be put in the same category as appendectomies and borrowing money. Really. There can come a time in a man’s life when there is nothing more important than an appendectomy. And he’d better get it, pronto. But that being true doesn’t mean you should go digging about in the same spot over and over again. Borrowing money also can be the very thing to do in some certain circumstances. But it doesn’t follow therefore that one should borrow as much and as often as possible.

An appendectomy is not intended for the man who is without ailment. It is a sick man’s solution to a very real problem. And borrowing money is not intended for all men on any occasion. It is sometimes the right solution for the man who lacks funds for an important transaction.

So insurance. The American public has been sold down the river on insurance. We’ve been led to believe that all men should have as much life insurance as they can afford . . . the more, the better. Not so. Life insurance is the poor man’s way of solving a problem. And poor men have poor ways, as do some men who are not so poor. When you buy life insurance you’re gambling on death. You’re gambling you will die before the actuarial tables say you will. And the insurance company is gambling you will die on that date (on the average). The insurance company has the best gamble.

Just as we should restrict appendectomies to absolute necessities and the borrowing of money to justifiable needs, so we should keep life insurance to a minimum. If you need an appendectomy, get it. If borrowing money is really the best solution, by proper means, borrow. If life insurance is the right answer (and sometimes it is) don’t buy the wrong kind. And don’t go hog wild. There’s a better way to invest money, Just like buying coffins . . . that’s the last thing I want to do. But there does come a time when a man must do that which is less than the best.

And remember this . . . whatever you do in the matter of life insurance should always be done in light of what you are doing in the areas of savings and investments. Each has a bearing on the other. Note that I said “savings and investments.” They are not the same. They are two different animals. Both are important. And all men (almost without exception) should have both.