Q: Why Term Life Insurance Instead Of A Cash Value Plan?
Dave Ramsey only recommends guaranteed level Term Life Insurance plans since it is the most affordable type of protection and it allows you to focus on more pressing financial issues. Term Life Insurance is a pure protection product which means it simply measures the risk of your death during the time period selected and therefore is the least expensive option available. This is why these are the only plans offered by Zander Insurance. The basic premise for cash value plans which are competitors to Term Life (Whole Life, Universal Life, Variable Life and Return of Premium plans) is that you will need life insurance your whole life so the plans overcharge you in the early years to pay the higher costs in the later years. Both Dave’s and Jeff Zander’s opinion is that if you buy term life insurance then you avoid this overpayment period and use the savings to attack debt and to build savings. Over 15-20 years with your debt eliminated and your savings grown you no longer need life insurance. The insurance industry for years has convinced the public that you have to have life insurance for your whole life. You only need life insurance for a period where your premature death would cause your family financial hardship. It also makes no sense to save money in a poorly performing insurance plan while you still have more expensive credit card or other debt. For more information on the benefits of Term Life Insurance please click on Term vs. Cash Value.
This is why Dave typically recommends 15 or 20 year level plans since he feels that you can accomplish very significant financial progress over this period so that you greatly reduce and eventually eliminate the need for life insurance. At younger ages he does feel that considering a 30 year plan is OK since they allow a more time and are useful if you are just starting out your family. Additionally, Dave typically recommends that families carry an amount of life insurance equal to 10 times their income. This level of protection will generally allow for a continuation of the financial lifestyle for the remaining family members and allow debt related issues along with education funding, emergency needs, and final expenses to be addressed. You can compare quotes online at Zander Insurance or call Zander Insurance at800-356-4282 for personal assistance.