Life Insurance: Dave Ramsey's Long-Term Financial Wisdom

Financial guru Dave Ramsey recommends term life insurance as opposed to whole life, variable life or universal life insurance. Term life insurance is a more affordable option as it lasts for a set number of years and doesn't include any investment elements. Ramsey recommends a policy amount of 10-12 times your annual income with a 15- to 20-year term, or up to 30 years for younger families. He also suggests avoiding cash value policies or policies with attached savings plans, and choosing a company that offers the least expensive, gimmick-free options.

Dave Ramsey's recommended term length

Dave Ramsey recommends a term life insurance policy with a length of 15 to 20 years, or up to 30 years for younger families. This is because, according to Ramsey, life insurance is only necessary for a short period while you are raising a family and building wealth. After this period, you will ideally be self-insured, meaning you have enough wealth to replace your income with annual returns on your investments.

The recommended term length of 15 to 20 years is based on the assumption that, within this time frame, your children will grow up and become independent, and you and your spouse will have built enough wealth to self-insure. However, it is important to note that the length of the term can vary depending on the unique circumstances of each family, such as age and size.

For example, if you are a younger family with children, a 30-year term policy might be more suitable to ensure that your children are covered until they reach adulthood. On the other hand, if you are a married couple in your 30s with no children, a 20-year term policy might be sufficient, as by that time you will likely be financially stable and your home will be paid off or close to it.

It is also worth mentioning that life insurance is not only for those with dependents. Single individuals may also want to consider life insurance to cover final expenses, such as burial costs, or if they plan to get married and start a family in the future.

In summary, Dave Ramsey's recommended term length for life insurance is generally 15 to 20 years, but this may vary depending on individual circumstances, with some opting for longer terms of up to 30 years to ensure adequate coverage for their loved ones.

Dave Ramsey's recommended coverage amount

Dave Ramsey recommends a life insurance coverage amount that is 10–12 times your yearly income for a term length of 15–20 years. This will give your family a financial cushion and time to grieve if you pass away. They can invest the payout into good growth stock mutual funds with a 10–12% return, which could replace your salary for years.

The term length should last until your family members no longer rely on your income, such as when your children are grown up and financially independent, or when you and your spouse have enough wealth that you no longer need life insurance. For younger families, the term length can be up to 30 years.

If you are a stay-at-home parent, you should still get your own insurance policy. Calculate how much it would cost each year to pay people to do all the work you do, such as food-making, kid-toting, and housecleaning. On average, stay-at-home parents need their own policy worth $250,000–400,000.

If you have young children, you need life insurance for at least 15–20 years. Even if your spouse works, they also count on your income. Get a term life insurance policy worth 10–12 times your income.

Dave Ramsey's recommended insurance company

Dave Ramsey recommends Zander Insurance, a company he trusts to offer insurance programs in line with his recommendations. Zander Insurance is not an insurance carrier but a broker that works on your behalf, sorting through carriers to find you the right policy. They advocate for you, not the insurance companies. If you get denied by one carrier, Zander keeps working to help you find a policy that fits your situation.

Zander Insurance has faithfully served Ramsey fans for two decades and is the only company that Dave and the entire Ramsey team recommend for term life insurance. Zander has been in business for decades, including 25+ years serving Ramsey customers. All that experience gives them a deep working knowledge of which companies can give you and your loved ones trustworthy coverage.

Zander Insurance will get you rates from top life insurance companies and pair you with the one that fits you best. They will also help you with things like processing policy changes, updating beneficiaries, and adding new bank information. They can also help you get your policy reinstated or provide a death claim packet.

Dave Ramsey's recommended policy type

Dave Ramsey recommends term life insurance as opposed to whole life, variable life, or universal life insurance. Term life insurance is more affordable and offers the same coverage.

He recommends a policy amount of 10-12 times your annual income with a 15- to 20-year term, or up to 30 years for younger families. This will give your family a financial cushion and time to grieve if you die. They can invest the payout into good growth stock mutual funds, with a 10-12% return, which can replace your salary for years.

Dave recommends avoiding cash value policies, which are often a better deal for the agent than the insured. He also discourages taking out a separate child policy to establish a savings plan or guarantee insurability in adulthood. Instead, he suggests a rider that covers all children in the family up to adulthood for $50-$60 per year for $10,000 in coverage.

Dave also recommends Zander Insurance, which offers no-gimmicks term life insurance policies.

Dave Ramsey's recommended policy term

Dave Ramsey recommends a term life insurance policy as opposed to whole life, variable life or universal life insurance. Term life insurance is more affordable because it lasts for a set number of years and does not include investing.

Dave Ramsey recommends a policy amount of 10-12 times your annual income with a 15- to 20-year term, or up to 30 years for younger families. This should be enough to cover your family's immediate needs and future needs. The policy should last until the people in your life no longer rely on your income, such as when your children leave home or when you and your spouse become self-insured.

For example, if you make $50,000 a year, you should get a policy worth around $500,000–600,000. This will give your family a financial cushion and room to grieve if you die. They can invest the payout into good growth stock mutual funds with an average long-term return of 10-12%. The investment growth could replace your salary for years to come.

If you are a stay-at-home parent, you should still get your own policy. Calculate how much it would cost each year to pay people to do all the things you do, such as food-making, kid-toting and housecleaning. On average, stay-at-home parents need their own policy worth $250,000–400,000.

Dave Ramsey also recommends buying term life insurance as soon as possible because the premiums only get more expensive as you age.

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