Interrupter CheckmarkInterrupter IconFacebookGoogle PlusInstagramGroupRamsey SolutionsTwitterYouTubeExpand MenuStoreCloseSearchExpand MenuBackStoreSign in

Ask Dave

Your Friend Is An Idiot

Dave explains to Daniel why he has life insurance and why he doesn’t buy whole life insurance.

QUESTION: Dave explains to Daniel why he has life insurance and why he doesn’t buy whole life insurance.

ANSWER: Daniel, your friend is an idiot. Your family friend is a well-meaning, nice person who’s an idiot. No, I do not have whole life insurance. I can do math. Consequently, I would never buy that crap. It is the worst product sold in the insurance industry. Out of all the possible kinds of insurance, whole life insurance is the worst.

Yes, I do have a large net worth. It’s interesting that you can pay estate taxes if you have money. I do have some life insurance, and I have two reasons for having life insurance, and it’s always term life insurance. It’s all I buy. I buy life insurance because I’m only 50 years old, I’m in great condition physically, I don’t smoke, and I don’t drink so heavily that it causes me to have problems with insurance. I can get a great rate on term life insurance. Given that, it really doesn’t cost very much for me to buy another million dollars of term life insurance. I buy life insurance because of SWI—Sharon wants it. She really doesn’t need it. She’s got plenty. If I die, she’s going to be all right. But she just wants it, and it doesn’t cost that much. She’d rather have that than some other sparkly thing stuck in her ear. That’s it. That’s why I buy some.

I do buy some, and a few people have bought some on me because I am so valuable as a brand to business areas that if I die, it would be a big problem for them. The same thing is true of my company here. That’s called key man insurance, and I have some that is that way as well. But I’m not in need of estate taxes to be paid by life insurance because I have money to pay the estate taxes. It just lowers the size of the estate. Why don’t I insure through that? You don’t think insurance companies make a profit? I’m 50 years old. I’m going to insure for 30 or 40 years? I’m going to buy life insurance? During that time, I could have just saved some money.

I self-insure through things like estate taxes from a mathematical standpoint. I’m not above buying some on emotion like I said just because my wife wants it. But no, I don’t own any whole life insurance. I don’t care how much you’re investing friend of the family guarantees that Dave Ramsey has it. He’s just wrong. I don’t—that simple. I buy term life insurance. That’s it.