(MONEY Magazine) – Readers are angry about the shabby sales practices of the insurance industry and banks that were revealed in recent Money articles. January's "Don't Be Suckered into the Life Insurance Mess" showed how people like Toledo nurse Sherry Horton (pictured here with her son Jeffrey) have been misled by manipulative agents; after a government investigation, she was eligible to recover more than $1,000. December's Your Money Monitor reported, among other abuses, that many banks do not disclose that the mutual funds and some other investment products they sell are not FDIC insured. Readers wrote in with suggestions on how to protect yourself. One of them, Sen. David Pryor (D-Ark.), is preparing legislation to curb questionable marketing procedures by banks. We are publishing his letter here.

As a former insurance agent, i ap- plaud January's "Don't Be Suckered into the Life Insurance Mess." Millions of American consumers have mistakenly invested in life insurance as a means of saving for the future. Cash-value insurance has a role as an investment alternative for people in certain situations, but it's not for everyone. It's about time someone exposed the deception being imposed on the American public.

C. Hall St. Louis

Your insurance tips did not include one of my favorites: Buy term life insurance. That way you keep your insurance and investment monies separate. Term life costs less than cash-value life insurance, and you then can invest the savings in decent no-load mutual funds. Let the high-commission insurance and stockbrokers search elsewhere for someone to feed on.

Bruce Andregg Spokane

As a licensed life insurance sales-person, I have this advice: Take the time to read your policy. Everything should be spelled out. If not, beware.

Elizabeth D. Kloha Charlotte, N.C.

TAMPERING WITH PUBLIC TRUST

December's money monitor report, "Investors Are Still Misled by Their Banks," explores a problem of great concern to me. I want to commend you for providing an important public service by warning readers that not every product available in a bank is risk-free. Older customers need to be particularly vigilant when it comes to uninsured investments such as mutual funds because their savings do not represent a renewable resource and they cannot write off losses as lessons for the future.

In a continuing investigation into banks' mutual fund sales practices, my staff has interviewed bank brokers and customers and reviewed internal bank documents. Examples of troublesome policies include sharing detailed customer financial information with people selling securities, without customers' knowledge; establishing commission structures that provide incentives for salespeople to offer the bank's in-house investment products, regardless of the products' suitability for a particular customer; and rewarding tellers and customer service representatives with bounties for customer referrals to the investment section. I and a number of colleagues in the U.S. Senate consider these to be questionable marketing practices and have started putting together legislation to address the problems. They are especially troubling because of the special trust banks have in our communities. In addition, when some customers see the FDIC emblem, they may believe that the FDIC coverage applies to all products offered in the institution.

To find out what is insured and what isn't, consumers should carefully read the brochures that describe the investments. If they are still confused, they can call their state securities regulator (get that number by calling 202-737-0900).

Sen. David Pryor Special Committee on Aging Washington, D.C.

ONE SAVVY BONDHOLDER

February's Editor's Notes--"how to Make Money in Bonds in '95"--said that in 1994 "people holding safe-sounding 30-year Treasury bonds backed by the full faith and credit of the U.S. Government watched in horror as the market value of their bonds dropped 16%." It just so happens in my case that Treasuries laddered out to 10 years and yielding on average an annual return of 7%-plus form one of the core holdings of my portfolio. But I did not watch in horror as bond prices dropped. In fact, I slept quite peacefully knowing these bonds would not be touched until maturity and would continue generating a comfortable income stream and, in effect, be bulletproof.

Why the horror? Why the panic? Savvy bondholders know they have a good thing for the long pull. A Treasury bond drop is a horror story only for individuals who probably shouldn't have jumped into bonds in the first place and failed to understand the mechanics of the market place. Ditto utilities when they dropped.

William A. Lowell Oak Harbor, Wash.

CLARIFICATION

December's Money Helps should have reported that, as of the 1994 tax year, house-hunting trips when you relocate are no longer deductible.

Address letters to money, Time & Life Building, Rockefeller Center, New York, N.Y. 10020; send electronic mail to letters@moneymag.com. All correspondence should include your name, address and telephone number. Letters may be edited for clarity or space.