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Ask Dave

No Need For Life Insurance Here

Danielle bought a whole life policy on herself since her husband had no insurance on her. It came with long-term care insurance. Is this a legitimate buy?

QUESTION: Danielle in Denver is a widow, and her husband had some life insurance when he died. Danielle bought a whole life policy on herself since her husband had no insurance on her. It came with long-term care insurance. Is this a legitimate buy? Dave says it isn’t.

ANSWER: No, ma’am, it’s not legitimate. You buy your long-term care insurance separately, and it’ll be cheaper. If you need some insurance for estate-planning purposes, you might look at some term.

What idiot told you that you had an estate tax problem? You don’t have estate taxes until you’re over $5 million. The insurance idiot who sold you the whole life and said you needed this for estate taxes that you don’t have. This is crap. You do not have an estate tax problem if your estate is not over $5 million. There is no federal estate tax on your estate—period. Any idiot that does anything in the financial world knows that. That’s the basics. That’s step one of estate planning. I’m not an estate planner, but that’s step one. I got that one. If you’re over $5 million, you start to have problems, and you’ve got to deal with that.

Let’s say you had a $20 million estate. You had to have $15 million worth of your estate taxed, and if that was all in that business, you might need maybe $5 million of term life to pay maybe $5 million worth of estate taxes.

What this guy needs is a good firing. You need to keep him away from you. He does not need to be near you. You should get all your money back—in most states anyway, you’ve got a 90-day look. I’m not positive about Colorado, but in most states, you’ve got a 90-day look, and they give you 100% back.

If you die, there’s a $2.5 million business, and there’s $1.5 million in other stuff. The kids are going to liquidate the stuff and put the cash in their pockets. What would they need more money for? They wouldn’t need more money, so who would get the term life insurance? You don’t need it.

You need long-term care insurance. It has nothing to do with life insurance. It’s more like health insurance or disability. It pays the nursing home bill if you have to go in a nursing home, or it pays in-home care if you want to bring in someone to take care of you. You’ve got the money to do that, so make sure you’ve got good in-home care options. You’re a multimillionaire, and you should have in-home care.

The Bible says there’s a real neat place in hell for people who take advantage of widows. Don’t mess with widows and orphans. It’s in the Bible. You do not want to be in that line wanting a cool drink of water. You don’t want to be in that line.

“I talked to my financial counselor, Dave Ramsey. He said you suck. Cancel this.” You can quote me on that.

I would get long-term care insurance in place. What you’re looking for is a broker on long-term care—not this broker. Typically, what a broker will do in a health insurance situation … You need to go to, click on the link for our insurance Endorsed Local Providers, and there will be someone in your area we can recommend who will shop all the different companies and show you different options from different companies. They’re working on your behalf—not on the behalf of the insurance company for long-term care insurance. You need to get that in place immediately.

Cancel the stuff anyway today. Don’t worry about it. Then you’ve got a month to go get long-term care insurance. You’re in good shape. If you had a nursing home today, you’ve got plenty of money. The trick is to not let it get eaten up. I don’t know why you would need life insurance at all. If there’s someone who’s counting on you or your income … I’ll give you an example. Let’s say instead of $2.5 million in the business and $1.5 million in other stuff, let’s say that your whole $4 million was a family farm. You wanted to leave some money to run the family farm because there’s no cash. You could buy a little term for that. Even then, you don’t have estate taxes. It would just be liquidity for the family business.

Your share of the business is your estate. As long as your estate is not over $5 million, you will not have taxes. It’s that simple.