Life Insurance Is NOT an Investment - Dave Ramsey Rant

SUMMARY

Brittany from Johnson City, TN calls into The Dave Ramsey Show to ask Dave about her life insurance policy. She currently has portfolio insurance, with both permanent whole life and term life insurance included. After going through Dave’s Financial Peace University, she learned that Dave doesn’t recommend whole life and wants to know if he agrees that she should switch to term life insurance.

Dave reminds her, “Never under any circumstances use life insurance as an investment vehicle.” He advises instead to take the money you’re putting into a whole life policy and invest it in good mutual funds.

When you use life insurance as an investment vehicle, you get a bad rate of return regardless of what your whole life agent quotes you. You make somewhere between 3–5% on your money rather than making 10–11% in mutual funds. Additionally, when you die with cash value life insurance, your beneficiary is only paid the face value of your policy. The cash value that you saved, that only accrued a small rate of return, is never given to your beneficiary. And you pay 20 times more for it than you would for term life insurance.

Dave believes the best way to buy insurance is to go through a broker that shops around several companies and finds you the best term life insurance deal.

RESOURCES

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[josevictoriano]

Insurance is for insurance investments is for investments two separate things

[Tcgrande]

THANK YOU FOR THIS!!! My financial advisor has been pushing HARD for me to get it as an investment... I don't want to. I am 41, no kids, no dependents.

[eatpigsnot]

12 whole life agents watched this video

[clarencejacksonjr.]

My mother had term life insurance at age 80. When she died the insurance company paid off the amount she had on herself. I got the same insurance from the same company.

[doggieboya]

When I enlisted in the service, 99% signed up for life insurance and I was laughed at for not signing up for it. All these 18-30-year-olds couldn't give me the correct explanation of why to sign up.

[SoundsAndMore]

Life insurance is simply what it is.
Life insurance is not an investment vehicle.

[oliverirving]

When an insurance salesman try to be your financial adviser, you know they are trying to gouge as much from you as possible.

[davester]

I have a $100K life insurance policy through my work and that is plenty for a single and childless man like me. I am debt free, mortgage free and fattening retirement accounts. Getting more life insurance would only make my mother and sister more insurance rich.

[stevee]

And remember, the purpose of life insurance is to protect people who depend on you in case of your untimely death. If you have no spouse or children, you probably don't need life insurance at all.

[AngieConfidential]

The caller is correct. The policy needs to be written to include the cash value in the payout to the beneficiary. Ramsey is correct in that most policies are not written that way. This is why it is so important to know enough to select the right agent and product.

[dustinwegner]

I have insurance through work. Its only 40 grand coverage. No one is going to get rich. Just enough to cover my funeral and some small bills and the keg party i want for my funeral.

[Tcgrande]

So upset. My financial advisor totally manipulated me and led to me telling me that it was a custom life whole insurance policy set up for additional post retirement income! I am so upset that he took advantage of my lack of knowledge. I canceled it today. Thank Dave Ramsey and God bless you for how you are guiding and helping us🙏🏻

[well.yousee]

I love how humble Dave is. Thanks Mr. Ramsey :)

[RockinAHomestead]

Hey Dave, I recently heard about a nook called farming without the bank. It talks about taking a loan out against a life insurance policy and "being your own bank" as a way to fund a farm/ranch business. I'm pretty skeptical about this but I was wondering if you know anything about this?

[droptozro]

$300/month.... wow yeah you got taken. You'll get $400k per person for about $18/month each in term insurance. $300 or $36? Easy answer.

[juanzapata]

Dave is right, insurance is not an investment..

[Mike-]

Don't get advice from anyone selling something always go to an independent finance advisor they should charge for their time. Anyone who is giving you free advice is not free they are making money by selling you an investment product where they make a commission.

[BizInTheFrontPartyInTheBack]

I sell permanent insurance and I’ve got no problem with Dave. He makes plenty of valid points. And he doesn’t cost me business because people I work with are often familiar with Dave but recognize that he’s not Jesus Christ and sometimes his advice doesn’t apply to their situation or may just be faulty. Sometimes mine is faulty too! No one has a monopoly on good advice. I ask people to consider why it could make sense for them in their specific situation. By the way, a majority of the time, it does not make sense. Term, or at the very least a combination of the two, is often the best way to go. Y’all should do your own research. Plenty of people that are equally as smart and successful as Dave have and will continue to endorse permanent insurance. Doesn’t mean it’s right for everyone - just means it’s right sometimes.

[walterpen]

What Dave is really trying to say is that we live in an age where the hard working class is being targeted. It's the wild wild west where there are so many ways to invest our hard earned money. Remember that any type of investment small or large that the returns are INCOME. YOU ARE AWARE THAT YOU MUST PAY CAPITAL GAINS TAX !!!!
We are not privileged like the insurance companies to hide their billions in off shore paradise seclusion.

[mariachavez]

Right. So im 36, you want us to buy 15 to 20 year term life insurance, if we die during that time, great, wonderful our families now have some funds to cover life expenses. But what if we DON'T die? So at age 56 were probably going to be sick, and guess what? The odds are we will no longer be insurable.

I'm willing to go with a well structured permanent IUL rather then hope to die before my term life expires so my family can reap the benefit.

Thanks for your great advise Ramsey.