Q: I've heard that I can make extra money by borrowing on my life insurance, without reducing the amount my wife would get if I die. Is this true ?

Answer: Yes, it's true, and it really works -- but only if you exercise strict financial discipline.

Let's use an example. Assume you have a $25,000 whole life policy which has accumulated $5,000 in loan value. (The policy itself includes a table of cash values at periodic intervals after issue.)

You can borrow that $5,000 at an interest rate specified in the policy -- as much as 7 or 8 percent for policies issued in the past few years, but only 4 to 6 percent for policies older than that. We'll use 5 percent for this example.

If you invest the borrowed money in a certificate of deposit paying 7.75 percent, you can draw $387.50 a year in interest income. From that income you pay the $250 interest charge on the loan -- and end up with $137.50 net each year.

The interest income is taxable. The interest expense is deductible -- but only if you itemize deductions. So if you use the zero bracket amount instead of itemizing on your tax return, it may not pay for you to fool around with this technique.

In the event of your death, the insurance company will subtract the amount of the loan (plus any accumulated interest) from the face amount of the policy, and will pay only the difference ($20,000 in this case) to your beneficiary.

But if the CD is in your name, the principal amount of $5,000 (plus accumulated interest, again) is immediately available to your wife (assuming she is your heir) without penalty or forfeiture. So she would still get the full $25,000, equivalent to the face amount of the policy: $20,000 from the insurance company plus $5,000 from the CD.

You have not reduced the effective amount of financial protection. But the reason I said it requires fiscal discipline is because this only works if you consider the invested loan amount inviolate.

If you may be tempted to spend the $5,000 on anything, then borrowing against the policy reduces the amount of money your wife would get on your death and defeats the financial goal you set when you bought the insurance.

Q: I am really livid. In April 1977 we contracted to have a house built; it was finished and we moved in the following October. With the promise of an energy tax credit, we paid extra for storm windows, then added storm doors and additional insulation. We just got our 1978 tax forms -- and it says the house must have been built by April 1977! Is this correct -- that a comparatively new house doesn't qualify for the credit ? A: I'm afraid it is correct; the energy conservation credit is available only for modifications made after April 17, 1977 to houses that were "substantially built" by that date.

Neither the Energy Tax Act nor the congressional committee report gives any clue to the reasoning behind this requirement. But I can make a guess.

By April 1977 builders, contractors and home buyers were well aware of potential energy shortages and rising energy costs, and were already incorporating energy conservation measures in new homes.

The thrust of the president's proposal was to offer tax incentives to owners (or renters) of previously built homes that were not energy-efficient.

Any time an arbitrary cut-off date is imposed, it's a good bet that someone will be left out in the cold (no pun intended). This time it's you -- and, as the (unpublished) balance of your letter says, you're already hurting in a lot of other areas.