Don’t waste money on whole life insurance. Protect your family with term life insurance:


In this video, Dave answers Ray’s question from Facebook. Ray asks, “Why term life insurance instead of whole life insurance? What is the difference?”

Term life insurance is just like any other insurance. You pay for insurance, and your beneficiary gets your money if you die. Cash value insurance, however, doubles as an insurance policy and an investment vehicle.

Say your term life policy costs $5. The same amount of coverage for whole life would cost you $100: $5 for the insurance and a $95 premium. That’s 20 times more expensive for the same amount of insurance!

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Let’s say you want to close your whole life policy. Not only is the rate of return on your money so low that it won’t even allow for growth, but you could even have to borrow your own money that you paid and then pay interest to the insurance company. Additionally, when you die, your beneficiary will receive the face value of your policy, but all the cash you saved up is kept with the insurance company. It’s one of the worst financial products in the world!

Dave always recommends term life insurance. Get 10–12 times your income and cover the ones you love.

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How much term life insurance do I need? Listen here:

Hear more about the tax implications of cashing out whole life:

Thinking of switching to term life insurance? Read these term life mistakes to avoid:


The Dave Ramsey Show channel will change the way you experience one of the most popular radio shows in the country! Watch video profiles of people just like you as they call in from Ramsey Solutions to do their debt-free scream live. The show streams live on YouTube M–F from 2–5pm ET! Watch here:

The Dave Ramsey Show : Is Term Life Insurance Better Than Whole Life Insurance?


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  1. Where can I find the documented data on rates of return for the whole life insurance? What type of whole life policy surrenders the cash value? What conflicts of interest do you have with Zander insurance? Is the cheapest policy always better? What if the cheapest company isn’t around or raises my premiums to keep my insurance in force because they don’t have the required capital to fulfill death claims?

  2. I just finished a small book by a Jake Thompson called Life Insurance (how the wealthy use Life insurance as a personal bank to supercharge there savings) He went on an on about term insurance being a junk product and how everyone from Walt Disney saving his company with his Life Insurance policy to Ray Croc using his policy to get Mcdonalds where it is today. It sounded like a good thing if there is any truth to it.

  3. ♦️I will agree with Dave only partly. ♦️

    Buy term life insurance in the amount your dependents need until they are expected to take care of themselves and no more / no longer.

    Where I think Dave and I part ways is the amout of term life insuracne you need to buy should decline each year, not remain even. Why? Well, why do you need this life insurancde in the fist place? Lets give a typical answer. You need it to provide for your child from the date of your death until the child’s adulthood. Well, that span of time they need financial suport declines by one year for each year you live so the amout of term insurance you need declines each year. What you need is not 20 year level term life insurancde but 20 year declining payout term life insurance.

    But that doesnt exist.

    So, buy the closest thing you can. Buy the SHORTEST TERM / CHEAPEST RATE term insurace you can find, likely 5 years, then reduce the coverage value each time it expires.

    Short, 5 year level term life insurance is even cheaper then 20 year level term life insurance.

    By the time you are 15 years older, when a new term life insurance policy starts becoming more expensive, well, you wont need very much of it any more. If you needed $200,000 of term life insuracne when you are 25 years old and your child is 0 years old, buy $150,000 when your former policy expires, and you are 30, and your child is 5. Do this again when you are 35 years old, reducing the coverage amount and again at 40. By the time you are 40 and your child is 15, you can cut that policy down to about $50,000. When you are 45 and your child is a adult, you have no child depending on you so drop your policy completely.

    I’m suprised / disapointed Dave is giving the advice he is giving.

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  5. My husband and I have had whole life policies for almost 20 years. Now that we're both 40 with medical issues, if we cash out and switch to term policies, it would cost us the same monthly premium. Does anyone have a suggestion of what to do in this case?


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