Living Within Your Means Vs. Leveraging, The Consistency of Dave Ramsey’s Buy Term and Invest The Difference – September 3, 2023

I was talking to some people in the financial services and insurance industries, and some of the younger folks are distraught with Dave Ramsey, primarily because of his financial advice.

I, being one of the elders found myself defending Dave Ramsey even though I don’t follow his advice. Why did I defend Dave? Simple, the average person, cares very little about financial education and these types of people should not be getting involved in Stocks, Whole Life, or Universal Life Insurance unless they’re willing to take the time to comprehend how they work and what the benefits are.

It’s an unfortunate reality that most people want to be TOLD what to do, and all financial products that aren’t made for SIMPLE-minded persons are packaged in one to benefit a specific type of person.

Those of us who comprehend the insurance market, know that every single whole life and universal life insurance product was created based on MARKET DEMAND. Often what happens is AFTER a life passing, people figure out what was MISSING from their insurance policies, and this is where the REQUESTS come in.

 

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After testing etc. typically, an insurance company will introduce a new permanent insurance product based on this perceived demand, and those who want this new permanent insurance product will sign up for it. Life Insurance in general, is a tough sell, so some insurance agents will sell clients the WRONG insurance products.

And when these people call up Dave saying they’re indebted and they have this “whole life insurance” product that’s eating into their cash flow, in some instances, Dave is right to tell them to cancel it, especially based on what he and the brands he promotes are selling.

Now, I personally don’t like that he bashes the entire industry, because the last thing anyone wants to return to “Only Term Life Insurance.” If a person for example, lives out their term life insurance and they’re in retirement age, and they’re not RICH, those people will likely end up resenting Dave Ramsey when the realize why WHOLE LIFE insurance was created, to begin with.

Permanent Life Insurance was made to correct the flaws of TERM life insurance. Term to 100 life insurance is depressing to think about and is often similarly priced to whole life insurance. The difference is Term Life insurance has no, savings or borrowing component to it. So when you comprehend this, you’ll see why Whole Life Insurance was created in the first place.

Now, with Mutual funds, as we all know, Dave has the whole Buy Term invest the difference, that also annoys a lot of the financially savvy, because if you’re investing for the LONG TERM, Segregated FGunds and even IUL policies are far superior, in that they can ENSURE your principal with “Resets.” Mutual funds that you’re holding for the long term can’t do that, if the market crashes, your principal or initial investment crashes with the mutual fund.

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So I get why some people in the insurance business are annoyed with Dve Ramsey on this, but hey, that’s what he’s selling, and based on his logic, it’s consistent, because as an example, when you’re understanding how the insurance market works, you see the risks involved in what Dave is proposing, but from his perspective, he’s selling the “Live Within Your Means” dream, and that’s fine.

Interesting times ahead!