BUYER BEWARE: Does Dave Ramsey Have a Radical-Biased Position on Whole Life Insurance? – “You can’t convince me whole life insurance is a good product” – October 11, 2023

Dave Ramsey posted an interesting snippet on Youtube from his show, which initially made it appear to me that he was taking a radical position on Whole Life Insurance.

However upon closer observation, Dave appeared to be targeting the caller, who I think was an insurance agent, talking about Whole Life Insurance.

My position on Life Insurance in general is that there is no one size fits all solution. If you’re a follower of Dave Ramsey, buyer beware that Whole Life Insurance was created because of the FAILURES of Term Life Insurance.

Once you pass 45 years old, you can anticipate that your TERM life insurance premiums will start to rise. Life Insurance is a private sector product and the private sector unlike Washington or your countries federal government, can’t Print Money out of thin air, meaning, that if the insurance company calculates that you’re going to die soon, they’re going to raise your TERM life insurance premiums, possibly to the amount I’m paying for my whole life insurance.

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You’ll also notice the amount you qualify for in TERM life insurance shrinks as you get older, and premiums get more expensive, whereas the opposite happens for those of us who have paid up insurance riders on our whole life insurance plans.

Because whole life insurance is more expensive than term life insurance INITIALLY, there’s a SAVINGS component to it. Not only is there a savings component to whole life insurance, but you can also BORROW money from the insurance company using your whole life insurance policy as collateral.

If you do not pay back this loan, yes it’s true it will be taken from the policy if you die, however, this is why there are a lot of different whole life insurance plans. For example, I have a dividend-paying whole life insurance plan. I pay higher annual premiums now because I want to have more insurance in the future.

Truth be told I wish I could put more money into my whole life insurance plan, but it’s currently illegal, because of the government. Why do I want to put more money into my whole life policy? Because it has a SAVINGS portion and a collateral loan portion built into the plan along with insurance and I don’t have to beg a bank to get a loan, the loan is automatic.

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Now, if I paid a little bit less for term, I would NOT be able to buy more insurance in the future and I would not be able to borrow money from my term insurance plan.

Also, I own property, so I also have to do estate planning, unless you’re purchasing a term-to-100 life insurance plan, you can’t do estate planning, meaning that if you’re not as rich as Dave or some of his guests when you retire, not only might it be had to get an affordable term insurance at retirement.

It will also be a difficult estate plan because with a term you can live out your TERM insurance, whole life insurance is for your WHOLE LIFE meaning that the insurance company HAS to give you something which is the justification for the higher premiums.

Now, this is not to play down term insurance, I still have a term insurance rider on my whole life insurance, which is used to make sure I get my payout even if I owe some money via a whole life policy loan.

Where I do agree with Dave Ramsey is that most people DO NOT have the discipline to pay their whole life insurance premiums, and surrendering your whole life insurance plan can even be a taxable event, because the idea behind a whole life insurance plan is for the insurance company to add INTEREST and DIVIDENDS to your premiums to make sure they have the money to pay out your insurance claims.

So if you surrender your whole life policy early, not only might you be the subject of fees, but you may also have to pay taxes. Most of the people who call Dave Ramsey are really bad with money, and for people like that, Whole life insurance is not a good match. Most ethical insurance agents and brokers for example will not and should not sell financially irresponsible people whole life insurance.

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Personally, I think Whole Life and Universal Life Insurance products are better suited for the financially savvy.

Interesting times ahead!