How Life Insurance Providers Are Screwing You Over! - Dave Ramsey Rant

SUMMARY

In this video, Dave reads an article about universal life insurance and explains why it’s the “the worst of the worst” of financial products. Unlike term and whole life insurance, universal life insurance allows buyers to have flexible premium payments. But eventually, the cost increases and those buyers are faced with an unattractive choice: pay an extremely high premium or collapse the policy altogether.

Here’s how universal life insurance works:

A portion of your premium covers your insurance and a portion builds cash value as an investment. The insurance is based on an annual renewable term, meaning that the cost of your insurance increases as you get older because statistically speaking, your probably of death is higher when you age.

So let’s say you pay a $200 premium at age 35, with $50 of that covering your insurance and $150 going towards your cash value investment. By the time you’re 60, the cost of your insurance might be $250. You’re still only paying a $200 premium, so the extra $50 starts coming out of the savings you’ve been investing for years. Once your savings are gone, the insurance company comes knocking at your door, demanding you either pay a higher premium to cover the increasing cost of insurance or you won’t be covered anymore. Now you’re left with no savings and potentially no insurance.

In this scenario, you could have been paying a fraction of the cost for term life insurance and had separate investments that your life insurance company can never touch. Dave recommends getting 10-12 times your income in term life insurance and

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[edbunting]

Had one and canceled when I found Dave. Got a 30 year term, cleaned up debt, and have a bright financial future. Thank you for all you do!

[edbunting]

Never invest your hard earned cash in things you don't understand. It's overly complicated for a reason!

[luisuribe]

Reading comments on Dave Ramsey videos make me think how easy people forget... everyone forgot 2008, or maybe they were to young to understand it. But don’t worry... we have a couple of bubbles that will make you learn the hardest way.

[barrrylincoln]

Thrivant Financial sold me a Universal policy years ago that ate itself up by the time I was 60. Afterwards the salesman that sold it to us lived here his entire life decided to move away.

[Wipper]

I signed up for Combined Insurance in 2014. It was a big mistake. This was a guy who went to my church at that time and he was very mean to me. When I signed up with him all of a sudden he became very nice to me because he knows he's getting money from me. Two months later it all of a sudden turned out to be chaos. Him and his buddies started spreading rumors about me. This was in a church. If Jesus was there in physical form He would've drove out those people and said to them "You have made my church a den of thieves". Also I had to pay an extra $150 for the premium. Bad choices! Now I know how to be careful with my money.

[lcifermorningstar]

Here is an old saying: A fool and his money are soon parted.
Thank you for the informative video

[michelarosier]

Thank you, Dave. R, every day you are opening our eyes to the light. I personally don't know about life insurance's, which one is right or bad. I'm being aware of it, when other businesses trying to offer any type of bad insurance to me. My eyes are open now. I personally have term insurance. 🤗👍Thanks for sharing.

[angelashevonne]

the question I have about term insurance is once the term is up you have to buy more and it is very expensive. I have a 30-year term policy and once the term expires to continue with more term insurance it was going to cost as much as $700 a month. I was in my 40s when I got it. I want to cancel it. My children are adults. I have 1 grandchild. It is not needed to cover funeral expenses. It would just be $$$ going to my children, who don't/didn't appreciate anything I do for them now. So I stopped doing. I've been pondering this for some time now and trying to get other's opinions as they may say something I hadn't thought of. I could be spending the premium amount of me and my expenses.

[saeligutierrez]

It’s insane how some agents make their money, they sell you mortgage protection with disability built in, they also sell you burial expenses, and then they get you a life policy term. If you have kids they put them in a Gerber cash value policy and then for a tax free vehicle they use indexed universal I think.

[douglascook]

So from my understanding you have to get over a mountain of fee’s just to get to this so called promised land of cash value that’s tax free, but by the time your able to even use it you’ve pretty much took a loss. Because of all the money you put towards the fees just to get to the benefit of the cash value. Then you have to put in even more money just to benefit from that. It’s like paying a high monthly subscription for a saving account you can’t use until the subscription is 100% paid off. Is that accurate?

[stevensam]

In certain cases. But doing research on topics before making a decision is the smartest thing possible. Remember they need your money and you don’t need to settle.

[QuantumEffectResidue]

Are we at the point where we will have to resort to getting a lawyer to look at these polices before we sign on? I think so.

[lilianachaconvega]

It's very sad that no one reads the fine prints and that some insurers don't explain the whole product.

[amandathompson]

Guys Dave Ramsey does not know what he is talking about when it comes to life insurance. I have a universal life policy on myself and I love it. Term insurance becomes very expensive as you get older and you drop the policy. Whole life and universal life are much better long term!

[WingChunGungFu]

Notice how he said "Universal Life Insurance" and not Whole Life. He said "unlike term and whole life" - remember - Whole Life is good. Don't let him tell you otherwise. Greatest investment my family has ever made.

[stackinglife]

just to review is for people with spouses and kids who would be financially crippled if you were to die suddenly. the policy is relatively cheap with big payouts because the odds you will die within the term of the policy is relatively small. Whole life is high premium and lower payout but a guaranteed payout upon the death of the insured. Whole life is for people who cant save a dime because the insurance company is not stupid at math. they take the money you pay in premiums and the payout in almost ALL cases is LESS then any idiot would make in returns if you YOURSELF invested the premiums and saved your money throughout your lifetime. Universal is basically salesmen promising whole life guarantees at term because insurance companies are greedy and customers are cheap its a perfect storm that screws the customer and its another product for insurance companies to separate idiots from their money. Please educate yourself and or buy Insurance at your own

[zayacz]

A friend had a variable rate annuity worth $350, 000 about 6 years ago. He could keep it there or buy 17 years worth of pension from his employer, worth 42% of his pay with a 100% spousal benefit in the event of his death. You pointed the way for him, Dave Ramsey. I asked him if he had $35, 000 per year more pension, would he give it up in order to get a variable rate annuity worth $350, 000. The obvious answer was no. He’s very happy with the decision, as is his wife.

[sambelley]

The problem here is financial advisors/agents do not explain the products (IUL and UL) correctly and set people up at minimum payments, where policy lapses in 17-20 years. If you set a healthy target, these can be great for building cash value for retirement or other funding. Great for cashing out at when the ROI is best (usually age 75-80, when rates start to eat cash value)
Also allows you to have insurance for your whole life a lot cheaper than actual Whole Life rates.

[jeffreykirton]

I’m from a family of hustlaz..all i need covered is my funeral expenses just in case somebody gets under my mattress after I die.

[Zarmar]

And term is the right way to go? I don’t think so