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For over 20 years I have worked personally with Dave Ramsey, his listeners and team members to help them make important and informed decisions about their insurance needs and the most cost effective ways to address them. Through the years I have responded to over 10,000 of Dave’s listeners regarding their insurance questions.

This blog contains many of the most frequent questions and answers since they provide an excellent resource to Dave's specific advice on very specific insurance questions. I hope you find this information to be a valuable resource that you can refer to many times in the future as you progress along your financial path. Click on the category noted which relates to your question so that you can see the posting currently available. If you do not see your question or still have concerns please don't hesitate to use the "Question Widget" noted on this site for further information or call us toll free at (800) 356-4282.

Many people are surprised that the advice from Dave and I doesn’t always involve the purchase of insurance as the only alternative. Insurance is a key component of any family's financial plan but it can also be a drain and a detriment if the wrong plans are purchased. Implementing the plans and approaches that Dave and I recommend, most importantly, the establishment of an emergency fund, will help reduce a families overall insurance costs and allow them to focus their dollars on more important things such as getting out of debt and growing wealth.

− Jeff Zander

Q: What is the Own Occupation Rider on a Disability Policy and Do I Need It?

2018 July 3
by zanderins

The Own Occupation rider is a nice benefit to have, but not crucial depending on your line of work and budget. Many people who work in non-specialty fields overpay for this benefit since there are few disabilities (outside of the most severe) that would limit you from performing the principal duties of most occupations. This rider was primarily marketed to specialty physicians when it was introduced, and the experience has gone poorly for the insurance companies.
With Zander’s disability plans, the Own Occupation rider is offered as an optional benefit; Dave typically only recommends it based on the room in your budget and where you are in the “Baby Steps.” However, Dave would not recommend spending money on it if you do not have your Emergency Fund established and are still struggling with debt – it is not a priority over those issues. With older policies, the Own Occupation rider may already be included. If this is the case for you, unless you are finding a plan with similar coverage or your budget has gotten really tight and you need to remove the rider to fund other priorities, consider keeping what you have.

Q: Should I Keep My Cash Value Plan if I Wouldn’t Save Money by Switching to a Term Policy?

2018 April 18

If there is no savings from changing to a Term Life plan, then it typically is best to keep the existing plan and just factor those expenses into your budget. You should take measures to ensure that the plan you have is not underperforming (i.e. the dividends or interest are not keeping up with the increasing costs of insurance as you get older). If that is the case, then eventually you will have to pay more for the existing policy than it is worth. You can request an “in-force ledger” from your current carrier, which will project out the life of the policy at the current premium paid and the interest rate/dividends being paid to make sure the policy does not falter in the future.

Remember that, as you pay down debt and increase your savings, your need for life insurance lessens so you can slowly reduce the amount of cash value life insurance you have and then redirect those funds to better investments.

Not sure how much life insurance you need? Click here to use our insurance calculator to make sure you have the right coverage to protect your family.

Q: Should I Consider A Combined Life And Long Term Care Plan?

2015 May 27
by zanderins

AThe combination of a life and long term care insurance plan is sometimes referred to as a hybrid policy.  These are based on buying a cash value life insurance plan and a rider that allows the cash value of the policy to be used for Long Term Care expenses.  Conceptually, and from a sales perspective, these hybrid plans seem to make sense. Looking more closely, however, there are serious flaws. First and foremost: the life insurance plan that these additional coverages are coupled with are cash value type policies such as Whole or Universal Life.  Dave is adamantly against these types of plans and coupling them with a Long Term Care Insurance benefit does not increase their appeal.  In most cases the added benefits are inferior to plans you can purchase independently and not worth the risk.  Many of the LTC benefits in a hybrid plan are limited to either the amount of benefit paid, the types of services covered, or the length of benefit period.

Dave Ramsey recommends life insurance while you have debt that your estate cannot pay if you were to die prematurely, and/or you have dependents who rely on your income for their financial lifestyle.  As you attack debt and grow savings, you start to reduce and eventually eliminate the need for life insurance while increasing the need for long-term care coverage.  Long-Term Care allows you to protect the financial lifestyle of both spouses into the future; incurring an expense for life insurance when it’s no longer needed so you can keep your long-term care protection makes no sense.

Please visit our website to get more information on Long Term Care insurance and to request a quote.

Q: Why Am I Eligible For Lower Monthly Benefit Amounts If I Am A Federal Employee?

2015 May 11
by zanderins

AAlmost all federal and Veteran’s Association (VA) employees are enrolled in the Federal Employees Retirement System (FERS), regardless of the agency at which they work, and are provided with reduced disability insurance retirement benefits under the FERS.  You can review information on this program by visiting the FERS website.  The plan provides 60% income replacement during the first 12 months that disability insurance benefits are paid, and 40% for each year thereafter until reaching early retirement age, at which point the FERS pension begins to pay.  Most insurance carriers base their offering on a 40% group insurance factor.  However, there are some carriers that stop offering coverage once a federal employee has more than 10 years of service, or reaches age 50 or 55.

Q: Does Dave Recommend Waiver of Premium Riders?

2015 March 13

A  Dave Ramsey does not recommend purchasing “waiver of premium” riders. As a percentage of cost, the rider is an over priced add-on rider that makes the insurance company a lot of money and rarely benefits the client. A waiver of premium rider states that you do not have to pay the premium if you become disabled. However, the definition of disability is so strict, that very few people actually qualify. In addition, term life insurance rates are typically very low. They can be afforded through your emergency fund if you have short term income issues, and then through your long term disability insurance if loss of income due to disability continues for a longer period..

Q: How Long Do I Need To Be A Non-Smoker To Qualify For Better Rates?

2015 January 16

A  Insurance companies typically only require that you go tobacco free for 12 months before offering a non-tobacco use rate. This is not their lowest Preferred Plus rate but still represents a strong savings off of the smoker rates.  If you have not quit a full year it really depends on the time you have left to reach this accomplishment.  Dave still recommends buying the longer term period, which is more expensive, but just for the one year,.  It locks in your rates at a younger age and is still beneficial in the event you do not complete the entire 12 month period.  If at 12 months you are tobacco free then you apply for a new non-smoker plan and benefit from the lower rates.  At the three year point then you can qualify for Preferred Plus (lowest rate) assuming all other health issues are normal and a further savings can be achieved.  It is simply Dave’s advice that you get what your family needs now since we can’t predict the future and then adjust as things improve.   You can compare rates online at our website or call us toll free at (800) 356-4282 for personal assistance.


Q: Annuities

2014 August 18

A Dave is not totally against Annuities but their priority in your financial plan is fairly far down the list. It really depends where you are in your “Baby Steps and Debt Snowball”.  Dave frowns upon making an annuity type investment while still in debt and if you have not maxed out other investment options such as your employer retirement plan and possibly even a Roth IRA, which grows tax free. If at a point where you have paid off debt and have utilized all other more productive options, then an annuity does offer some tax deferred growth and can be part of a logical plan. There are just several other more productive steps to take first.  He does prefer Variable Annuities over any others since they allow for investing in stock mutual funds with the tax preferred protection of the annuity. You may want to contact one of Dave’s Investment ELP’s to compare options to the plan you are considering. You can visit and click on Investment ELP.

Q: Are The Benefits From A Life Insurance Policy Taxable?

2014 April 10

AAs long as some very simple rules are followed, the death benefit from a life insurance policy is always treated tax free from federal income taxes.  There are a few situations where certain IRS or accounting rules, if violated, could make it a taxable event.  If a business pays for a life insurance policy and deducts the cost of the policy as a business expense, which is not allowed, then the death benefit could then be taxed.  Also, if the owner of the policy, the insured, and the beneficiary are three different people then the death benefit could be considered a gift and subject to tax.  It is also advisable for individuals with larger estates to not be the owner of their own policies since the beneficiary may not be taxed but the value of the policy could be included in the owner’s estate tax valuation.  These are infrequent situations and as mentioned the vast majority of life insurance proceeds are paid Federal and State income tax free.


Q: Does a 7702 Private Plan Make a Cash Value Plan a Better Deal?

2014 January 24

AThere has been an increase in the amount of companies offering 7702 private plans.  This is a fairly interesting development since there is nothing legally defined as a 7702 plan.  The use of the term 7702 plan really doesn’t exist.  It is just another “sales tactic” of agents to sell cash value plans which are inherently flawed.  The 7702 plan is a marketing term used to allow an existing set of insurance products, typically Variable Life plans, to borrow some of the reputational credibility of an IRA or 401k plan. There is an IRS code 7702, however this section addresses the tax implications of life insurance contracts and does not bestow any additional benefits by naming a plan under this label.  It’s just another sales gimmick and Dave’s criticism related to why Cash Value plans are poorly designed consumer products does not change in any manner due to this new “marketing approach”.  The products used still have all of their inherent flaws and should be avoided.

Q: What Is A Suicide/Incontestability Clause?

2014 January 24

AThe Suicide/Incontestability Clause is applicable on every term policy and relates to those individuals that misrepresent or lie on the application about issues that would have caused them to be declined if that information had been properly disclosed.  The two year suicide clause is very simple, if a person commits suicide during the first two years policy period, the death benefit will not be paid. The company will simply return the premium that was paid to the insured’s estate and no benefits will be paid.  After 2 years then there is no limitations and a death by suicide would be fully covered.

The Incontestability clause also applies during the first two years and allows an insurance company the right to verify the accuracy of the information provided during the application/underwriting process of the policy.  If there were material misrepresentations regarding info that would have caused the company to decline the application, then the company has the right to deny the claim and return the premiums.  Once a policy remains in force past the first two year period, the company typically has no recourse and will pay the policy benfits to the beneficiary.