Model
Digital Document
Publisher
Florida Atlantic University
Description
It is the hypothesis of the writer that the average middle-income
person would be better advised to purchase a whole life policy
rather than to buy a "lower-cost" term policy with the thought of using
the difference in "cost" to invest in common stock, possibly in an
effort to combat inflation.
An analysis is made of the returns one might expect from each
method of investment, based on data in the past decade.
On the basis of this analysis, it would seem that a person
would have fared about equally well in a choice between the two methods,
provided that such person did at least as well in the selection of
stock investments as the averages of stock market results (in terms of
over-all income, including both capital gains and dividends). Although
no conclusive choice would appear to be warranted, the uncertainties
inherent in the purchase of term insurance and investment in stocks
would appear to preclude such alternative for any person not wishing
to speculate.
person would be better advised to purchase a whole life policy
rather than to buy a "lower-cost" term policy with the thought of using
the difference in "cost" to invest in common stock, possibly in an
effort to combat inflation.
An analysis is made of the returns one might expect from each
method of investment, based on data in the past decade.
On the basis of this analysis, it would seem that a person
would have fared about equally well in a choice between the two methods,
provided that such person did at least as well in the selection of
stock investments as the averages of stock market results (in terms of
over-all income, including both capital gains and dividends). Although
no conclusive choice would appear to be warranted, the uncertainties
inherent in the purchase of term insurance and investment in stocks
would appear to preclude such alternative for any person not wishing
to speculate.
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