Fifty years ago, life insurance was a staple of middle-class America
By 1971 inflation had briefly exceeded 6 percent, and the trend was thought to be so dangerous to the economy that President Nixon imposed wage and price controls in an attempt to head off the combination of rising costs and a stagnant economy. The guns-and-butter conundrum of the Vietnam conflict, however, soon created a long-building pressure on inflation and thus interest rates. Baby boomers growing up in the 1950s may have an almost cinematic, nostalgic recollection of an era tame in inflation yet booming with postwar economic expansion. At that time, the mutual fund industry barely existed. With $63 billion in assets by late 1950, the life insurance industry was second only to commercial banks' $148 billion in financial institution total assets; the next closest industry was mutual savings banks with $22 billion.Life insurance companies were the backbone of the American economy in the 1950s, providing home mortgages and policies that represented a portion of the typical family's savings. Policies were almost always tucked away in a drawer with other important documents and rarely looked at until death occurred and a claim was submitted to the insurer. Whole Life insurance was a reasonable purchase with a long-term rate of return on cash value that was at least as good as a savings account. The prime lending rate was 3.25 percent, mortgage rates were typically 4 percent (and often obtained from a life insurance company), and passsite savings rates were 2 percent. After all, homes in many parts of the country cost as little as $5,000-$10,000, a new Oldsmobile was less than $3,000 in 1955 (and the gas to power it was 20-25 cents a gallon), and candy bars were 5 cents.