YouTube Review: Term vs Whole Life - Dave Ramsey

Blog: Why Is Term Insurance Better Than Whole Life Insurance? - Dave Ramsey Youtube Video Review

Hello! Today I would like to share some important insights why Term Insurance is better that whole life insurance. According to Dave Ramsey, Term Life Insurance plans are much more affordable than whole life insurance. This is because the term life policy has no cash value until you or your spouse passes away. In the simplest of terms, it’s not worth anything unless one of you were to die during the course of the term. Then that’s when you receive money.

Of course, the hope here is you’ll never have to use your term life insurance policy at all—but if something does happen, at least you know your family will be taken care of.

On the other hand, 

Whole life coverage lasts throughout your entire lifetime. It might sound like a good thing to have life insurance coverage for your entire life. But here’s the truth: If you practice the principles that Dave teaches, you won’t need life insurance forever. Ultimately, you’ll be self-insured. Why? Because you’ll have zero debt, a full emergency fund and a hefty amount of money in your investments.

Since you were able to build up your net worth, you have peace of mind. At this point, (even without life insurance) if something were to happen to you or your spouse, the surviving spouse would be able to live off your savings and investments. Congratulations, you’ve become self-insured! When you become more financially secure, you have less and less of a need for life insurance.

How Much Life Insurance Should I Get?

Dave recommends you buy a policy with a term that will see you through until your kids are heading off to college and living on their own. That might be anywhere from 20 years if you already have children to 30 years if you don’t have children or aren’t finished adding to your family yet.

You should purchase a term life insurance policy for 10–12 times your annual income. That way, your salary will be replaced for your family if something happens to you. You can run the numbers with our term life calculator.

And don’t forget to get term life insurance for both spouses, even if one of you stays at home with the kids. Think about what you would pay in childcare and home upkeep costs if the stay-at-home parent was gone! No matter what, you both need term life insurance.

Don’t Wait Until You Need Life Insurance to Get It

The truth is, we can’t see the future and aren’t promised tomorrow. Life is precious! And the ideal time to buy life insurance is when you’re young and have a clean bill of health. Especially since life insurance companies are all about weighing the risks of the person purchasing the policy.

Thank you for reading the article today and Have a great day!