Your Life Insurance Sucks!
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- Опубліковано 27 сер 2024
- Don’t keep a policy like Sharon’s that keeps increasing in cost. Get term life insurance: goo.gl/LFpCEj
SUMMARY
In this video, Dave speaks to Sharon, a 68-year-old woman in Sarasota, FL. She bought a universal life insurance policy 20 years ago and is now struggling with whether she should cash it out or not.
With universal life insurance (which is just a type of cash value life insurance), a portion of your premium goes towards paying an insurance cost and goes up every year because it is based on annual renewable term rates. Each year, more goes towards insurance costs and less goes toward your investment.
Sharon and her husband have recently been notified that their payments were going fully towards the insurance cost, with none left over for their investment value. Plus, in the next two years, they will have to start paying more to cover the increasing insurance cost. Since Sharon’s husband has now battled cancer twice, she is wondering whether they should cash out their policy now or increase their payments to ensure they are covered in the future.
Dave recommends that Sharon keep her policy for 2 more years until her insurance company is going to make her pay more per month. Then, she should check on her husband’s health, and if he’s still cancer-free, she should drop the policy. If her or her husband’s health is not well at that time, she should keep the policy and pay whatever it takes to keep them covered.
RESOURCES
Hear more of Dave explaining why term life is the only type of life insurance you should have: • Heated Debate Between ...
Learn the real truth about life insurance here: www.daveramsey...
Thinking of switching to term life insurance? Read these term life mistakes to avoid: www.daveramsey...
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So its basically like when you donate money to a multi millionaire dollar charity organization. 99% goes into administrative cost/fees and 1% goes into the actual cause.
A paid off home mortgage is taking the place of the BMW as the new status symbol of choice ❤️
Tar Jab no status symbols
I'll bet government will have a new tax ready for people who paid of their homes, if and when it becomes a too big trend.
Even at 12% it's 71,000. Dave come on man!!!
Although Dave's advice is to the caller is fair and measured, not all whole life insurance agents are crooks. There are circumstances such as the funding of final expenses where purchasing a whole life policy makes sense, predominantly due to (a) the desire for the client to eliminate the risk of outliving term insurance, and (b), the client is in poor health, and would have no chance at an advanced age of qualifying for anything other than a whole life plan with easier underwriting qualifications due to health issues. Plus, there are some people so set in their ways that saving money is an unrealistic expectation.
bad investments are not the answer for people you don't save.
I'm late 20s... probably won't ever give these policies the time of day... I'm hearing just invest!
I agree
She would have about $44,000 saved up with an average of 8% return with compound interest. If she took $77 per month.
He doesn't get it because he doesn't want to get it. It's the same story he's been telling for years. He's obviously wrong, and the reason he's wrong is because his numbers don't add up, but in this particular case, his bias also plays into the reason *why* he's wrong. Observe he starts out talking about a universal life policy (which were chronically underfunded in the old days) and then switches to a rant about whole life insurance - a different type of cash value insurance which doesn't function like universal life. She wouldn't be facing this sort of problem with WL because those can be RPU'd (universal life can't be paid up) and she wouldn't be facing a lapse decision.
A properly structured and leveraged Indexed Universal Life Insurance policy can provide tax free growth and effectively manage risk. It's all about structure and the right company. It is true that many cash value life insurance policies are bad, but when done correctly they are a truly phenomenal retirement vehicle.
They're garbage just like the people who sell them. Drain the swamp on these low-lifes.
The biggest issue with this policy is that it was improperly designed from the outset. Potentially hundreds of thousands of people 60 and older have universal life insurance policies that will end up doing the same thing at some future date, where the costs of insurance exceed the premium outlay, and eventually cause the policy to lapse. I've seen it numerous times working with seniors and their life insurance. Many were sold a bill a goods and have no chance of recovering, considering advanced age and poor health.
David The Insurance Man! You mean the policy’s are sold period. The only Universal Life, Whole Life or any Cash Value policies are ones not sold.
Absofreakinglutely. Just to have a blanket statement that states that all universal life insurance sucks is not necessarily true Dave. When it's properly setup, funded, maintained, for the right client and situation, then it can work optimally. If all these parameters are ignored or not addressed, then it has a chance to fail Dave, but doesn't mean it can't be an optimal solution, in certain situations.
Dave is being paid by a company who pushes Term because Term pays out less than 3% of the time. Of course the company wants to push Term, because they only have to pay out 3 out of 100 times. 97 people paying for it that will see little benefit.
Did you realize how cheap term policy is?
ding ding ding Revolution 1 Media gets the prize for the correct answer.
Um yeah...so that we could take the cost from choosing a UL and invest it. I'll gladly give up a $100K policy after 20 years if that means I get to invest to a net worth of a $1MM.
Oh well.
only 3% pay because the policies get cancelled when they are not longer needed. It is insurance, once you have paid off the mortgages and saved for retirement, Life insurance should not be needed. term insurance until you don't need insurance anymore.
Simple question: What happens to the cash value when the person dies?
Use the policy value to pay the premium...do you really think there will be cash value when they want to cash in?
I love how he assumes John Q Public is going to "invest the rest". Very few people do. They spend it all, outlive their term, and then can't health and/or income qualify for anything but a burial policy.
Only an absolute idiot would believe that people don’t or won’t invest the difference. You see the same discipline it takes to pay for cash value life insurance is the same discipline it takes to buy term and invest the difference.
If your UL is set up right and you overfund it while you work you can pay little to no premium later. As long as you have Cash Value in the policy, it remains active.
they still keep your money after you die... you get either insurance or your poorly run investment but never both... UL is a bad investment
Key is to properly and correctly design policy......you wouldn't build a house on a foundation of sand...would you?.....
You're correct, and cash value policies are that sand.
Please HELP! I'm currently searching to buy life insurance but I'm having a really hard time understanding life insurance and this conversation made it even harder. They put in $16000 in 20 years and their cash value is $6000 (don't hit me if the numbers are a little off) so their insurance cost is $10000 had he died pay out would had been $80k. If they had bought term for $16K over 20 years we a pay out of $200K, now the policy ends and they insurance cost would be $16K. How is term better? In this case I don't think buy term and invest the rest doesn't apply because is not enough money. Also had they invested $16k over 20 years with a 12% annual return they would have $70K but would have to pay taxes on that. Guys what I'm missing here? Help!
Makes sense!!!.... I like how he assumes they would just use the whole $77 per month to invest without buying any life insurance.....
You're missing the fact that term insurance is dirt cheap when you're young. It wouldn't have cost them $16k. I pay like $3 a month for my term insurance.
Penguin1290 how old are you if you don’t mind me asking?
@@penguin12902 how much face value?
@@AG-iu9lv $100k
I was suckered into this policy during my early years in the military. The rate was a guaranteed 4% annual interest so I may some... some, but not a whole lot of course. I'm retiring from the service in a few months and was wondering if I'll be able to rollover my cash amount into some sort of fund for investment, or will I need to cash it out and pay taxes?
How are you? You could do, potentially, a 1035 exchange and the money gets rolled over in to a new policy and can earn more interest than 4%
Dave Ramsey is way off base on this and should not be giving any life insurance advice. Life insurance policies can be structured to be guaranteed premium and with or without cash value at the time of death. Many things effect the “cash value” of a life policy like someone taking a loan against the cash value. This alters the policy illustration and therefore alters the monthly or annual premiums. Life insurance serves a great service to people. And Dave Ramsey diminishes this and unfortunately is giving bad advice.
. Life insurance serves the insurance agency I guess... Only thing of value is term policy...
Yup. I'm so sick of Dave Ramsey. He's a nice guy but has NO IDEA what he's talking about.
You sound like an insurance guy.
Look at all these woke insurance salesmen. GTFOH.
You sell insurance?
If it's so bad why don't people Sue
Because it's legal, they agreed to the policy. Why don't people sue when they get ripped off on groceries. Lawsuits don't fix poor decisions.
There's nothing wrong with whole life policies. Ramsey just wants to exploit an old hypothesis that didn't work to make a buck off the gullible. "Buy term and invest the rest" is a concept that's around 40 years old, and time has shown that the vast majority of people don't invest the rest.
misleading I hate his life insurance videos.
What's misleading about it. If you take the money you put into a life insurance policy and invest it instead you'll at minimum double what you would have in that policy.
Hey Dave I have 2700 in car debt with an interest rate of 34% should I try and get a lower rate then attack the debt or should I just continue to with the loan i currently have.
34%??!? I dont have to be Dave Ramsey to tell you to get out of that one
I see what you did here Oscar. Troll away sir.
It should be illegal charging that much interest. I have a 5.7% interest rate.
They should have got a whole life policy. A term policy or a universial life policy ends and the price goes up on them.
Benton Tong lol you don't listen to Dave Ramsey very often
A term policy is 1/20th the price. And as we just saw whole life policies do go up in price, they just make it look like they don't. With term, you can invest the difference and be home free.
@@randomkid7390 whole life policies do not go up in price if they're setup correctly, the policy in the video was a universal life policy where the premiums do rise, know the difference.
an universal life policy is a blend of whole life and term, so if anything it's the resetting term policy that hurt this lady in the video.
@@mikegolding6476 No, there is no such thing as life issurense where the price stays the same, unless maybe if it was way over priced to begin with.
@@randomkid7390 that doesn't make sense.
A 10pay or 95 pay or any other number is designed to be equal payments each year.
😂😂😂😂😂 whole life agents
They're weasels.
Funny, I see full blown advert for term life insurance, yet you call the entire industry a rip off, something don't add up. Shame, you were a good listen before, now you sound so arrogant
He didn't call the insurance industry a rip off - only the ones that push whole/cash value policies.
ALL INSURANCE PRODUCTS are great, its just a matter of which stage of life you apply it.......when someone puts down one product over another, that's not wisdom. term life, whole life, universal life all came to be as a result of evolution in the industry. lets celebrate that our loved ones are going to be taken care of when we pass on......that's the beauty of this industry.
R Lee, I bet he has more money than you have.
@@adeoluolusanya4783 True, but name one scenario where whole life is better. It does not exist. Get term for 1\20th the monthly rate and invest the difference.
@@randomkid7390 say 4 example you get a 500k 20yr term for $20, and invest $80 diff at a rate of return of 10 %, you will have $61k but no insurance after 20yrs. You have outlived your insurance. To continue to have coverage you may have to pay 4-6x the initial $20. I recommend whole life for people less than 25 years. The whole life will have a temporary and permanent component to be paid up in 20 yrs. That way your insurance is truly insuring you. For older people who can afford it, this is still a good strategy and the price is always right
Love your show Dave . My son is 25 & has a paid in full 10k life insurance policy with cash value of 3k I believe. Just wondering if it would be wiser decision to cash in this policy & start investing it into growth funds ? Thx for any thoughts
I think this video answers your question. If your son gets a term policy I bet it will be about 1/20th of the price. If he invests the difference over the next half century, he will be much better off.
The cash value is very low, how much is he contributing and what's his health? I have a client who has a soon to be 4 year-old who has $1,200 saved up a cash value policy. The higher the amount of coverage, the more money he could put in one of those.
Horrible advice!
Sorry, such bad advice here from someone who obviously does not understand how universal life policies work. She should keep that policy until her husband passes away. He's GUARANTEED to die. It's guaranteed to pay out. There is NO WHERE she can put a few thousand a year somewhere and get the return to beat that tax-free death benefit GUARANTEED. All this woman's life she's only saved $80,000 in a 401k which is fully taxable. How can she now, at age 68, invest to beat a $80,000 life insurance death benefit? Sorry, awful advice here from this guy! I hope she doesn't listen to him.
She should start paying more now. Letting the $6,000 cash value pay it will result in her not having any cash value OR life insurance benefit later, so that's HORRIBLE advice!
$77/month invested for 20 years would NOT BE $300,000-$400,000 20 years later as he says. Anyone with a calculator can figure that out. That's laughable. That right there lets you know he has no clue what he's talking about.
The husband went thru cancer twice & he could have died and so it was the responsible thing to do to have that coverage all that time. The problem with this is that she has been paying MINIMUMS (or close to it) all those years which is not what you should do with universal life. Universal life is flexible premium so you can pay more/less as you please to control how the policy will function.
What she should do at this point is ask the company to run an "in-force" illustration to solve for how much she needs to pay to keep it going until at least her husband is age 85. Then solve for same thing at $70,000, $60,000, $50,000... And pay what she can until her husband passes.
Salina H. She won't get the cash value of the policy if he dies. The insurance company absorbs it and will only pay the face value.
You do not get the cash value AND the face amount.
The only people that argue with Dave on this topic are greedy insurance agents
Not sure about the States, but in Canada you get both face amount and cash accumulation upon death
Not true. You are paid both face and cash value upon death. I'd need to see proof other wise.
First