Question: Rob's dad has 2 whole life insurance policies on Rob and his brother, and another on his wife. He has a mortgage, and Rob was telling him about Dave's plan to get term life insurance and cash it out. Dad thinks he won't get any value from cashing them out, but Dave stresses how important it is to do just that.

Dave Ramsey's advice: He's been ripped off for many years, and every day he keeps it, he's being ripped off more. If he's been screwed over for 20 years, does that mean he wants to keep getting screwed over? This is the worst financial product that the middle class buys. Don't put money in a pocket that has a hole in it.

Stop the bleeding now. You can't keep that stuff, it's nasty. Only keep it if you can't get other insurance and you need insurance. Get the cash value out and get rid of it, but only after getting term life insurance in there first.

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Question: Shelly's insurance rates were increased because of her FICO score going down because she is debt free. That makes her mad, and she wants to know what she should do. Dave is in the same boat with her.

Dave Ramsey's advice: This is absurd, and it's ridiculous that the insurance companies look at it this way. The larger percentage of low FICO score are due to someone not paying a bill. You and I suffer for this because we don't have any debt, which leads to a low FICO score. I would tell them that an increase of $200 in my premium is a good indicator that I will change insurance companies.

You could also track down an independent insurance broker and see if they shop for you and make a market for you. DO your best to not give a company like this your business.

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Question: Emily just found out about 2 whole life insurance polices that her grandparents took out when she was born. They were just passed on to her and she wanted to switch them to term life insurance. There is $7,000 in loans against them done by Emily's mom. Is it dishonoring her grandparents' memory to keep these policies?

Dave Ramsey's advice: Get the right amount of term life insurance in place and then cash out this policy. You are not wasting this policy by cashing it out. Your grandparents have been honored by how you used this; they just got ripped off in the first place. We don't honor them by continuing the family stupidity.

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