Dear Harry:

I am a 72-year-old widow. I have close to $150,000 in a Benefit Management Account in State Farm Life Insurance Co. This came from my husband's life insurance when he died last year. I elected to have them hold the money at 4.5 percent interest, but I have had to draw from it several times for home repairs. I cannot put more money into the account. I recently noticed on the checks I got that there is no FDIC emblem on them. I called the company and was told that this account is not FDIC insured, but that it was perfectly safe unless State Farm went out of business, and that was not going to happen. Even then, it could possibly be OK. What do you think? I don't want to put it into a bank because the interest would be a lot less for money that is instantly available. My income comes from Social Security and an almost equal amount from a pension. I can't take any real risk with this money.

What Harry says: State Farm is a very sound company at this time. However, with the volatility of the economy, I cannot predict what will happen this week or next year. There are two ways to be perfectly safe: U.S. government obligations and FDIC-insured accounts. As you noted, you'll be giving up interest for safety. There is no need to have all of the money immediately available. You could keep an emergency fund in a bank money-market account for, say $25,000, with the rest in CDs approximately evenly split so they're due quarterly over the next two years. You can even do this all with one bank if you choose and still get the benefit of the insurance. *

Write Harry Gross c/o the Daily News, Box 7788, Philadelphia, PA 19101. Harry urges all his readers to give blood - contact the American Red Cross at 800-GIVE LIFE.