Whole vs Term Insurance? Dave Ramsey takes a look.
Dave Ramsey talks about the reasons behind Whole vs Term Insurance and why he recommends Term Life Ins over any type of permanent insurance . Here Dave Ramsey takes an email and gives his advice. The best life insurance is term life insurance .
Whole Life vs Term Life Insurance Transcript :
“Alright checking in with email bag. Tyler from Massachusetts writes:
“”Many people have a long term need for life insurance. How can you recommend term to everyone? Don’t you feel like you’re giving them bad advice? Their term life insurance will likely expire when they need it most. Tyler“”
“Spoken like a true life insurance agent Tyler. How long you been selling life insurance?
And those weren’t questions. Those were passive aggressive statements weren’t they sir? So let’s deal with it though.
Uh, I can easily recommend term life insurance as the only thing because the rest of it is garbage. It’s a rip-off. You’re much better off buying term life insurance at about 5 cents on the dollar for the same amount of insurance and investing the rest of your money. You’ll end up with much more.
Let’s kind of follow this through for a second. You’ll see what I’m talking about.
Let’s say you’re talking to a 32 year old who has a 4 year old and a 2 year old. Let’s visit him 20 years from now when his 20 year level term that I recommend expires. That would make him 52. He would have a 24 year old and a 22 year old. They should hypothetically both be out of college, be grown, be gone, out of the picture. No longer a liability. The kids are grown and gone at 52 for that 32 year old 20 years from today.
Let’s see. His house would be paid for 20 years from today because you’ve never heard Dave Ramsey ever recommend a mortgage for more than 15 years. He would have been debt free for 5 years house and everthing. Something to think about.
Let’s see. Would he have anything in his 401k. Well, if he’s been investing 15% of his income until he was debt free and after that loading up on everything and if he made an average household income of $40,000 what would he have 20 years later?
Well, he’d have anywhere between $500,000-$700,000 in his mutual funds.
Well, let’s see. He’s 52 years old. His kids are grown and gone. The house is paid for. There’s $700,000 in his mutual fund. He dies with no life insurance.
See Mom Scott. His wife Scott with no kids, no mortgage and $700,000. I think she can struggle through Tyler. That’s how I recommend term insurance cause I recommend doing a financial plan called getting out of debt and investing along with the idea that your term insurance is going to expire.
Even if you want to keep term insurance and you’re healthy you may choose to do it. I have absolutely no financial need for term life insurance. A little bit for some estate planning but very minor.
There term life insurance that I have is very simple. It’s so cheap at 47 years old in the great condition that I’m in…I don’t smoke and I don’t do all these crazy things like jump out of an airplane. So I can get term insurance for nothing and it’s so cheap that I keep several million dollars on me extra just SWI. “Sharon Wants It.”
She’d rather have that than another thing on her finger you know!”
Whole vs Term Insurance? Dave Ramsey’s Advice
Never buy whole life insurance and anything that ties an investment to a life insurance policy. It is the biggest ripoff in the life insurance market.. Remember that you can throw money at a whole life insurance policy for the rest of your life or purchase term life insurance and take the savings and put it in the bank or any investment of your choosing. You control the money and it is not locked into your life policy..
For a much greater financial gain the life insurance agent will normally try to sell you a whole life insurance policy instead of focusing on what your family really needs. Keep in mind that agents get a large payoff for promoting and selling whole life insurance policies: Universal Life, Variable Life Insurance, Permanent Life Insurance or any life policy with an attached investment etc. .
You are essentially giving free money to your life insurance company if you own a whole life insurance policy .
Switch out your whole life policy with term coverage but make sure you go online and compare life insurance quotes to find the best life insurance policy that is term .
Do not ever cancel your old permanent insurance policy before new term life insurance policy goes into effect.
Once your new term policy is effective you can now take your savings and put it in the bank or invest it in whichever way you choose . Just like Dave Ramsey says: Pay off your consumer debt and start your savings and investment for the long term .
We also recommend you automate your savings process as well so you won’t have to worry about forgetting to make investments each month . By automating your monthly investments that you fully have control over you set yourself up for financial freedom by practicing good saving habits .
Regarding we honestly believe that you will increase your net worth dramatically if you take Dave Ramsey’s advice to heart and apply it. When comparing Whole vs Term Insurance choose the latter Term Life Insurance coverage .
