The Truth About Dave Ramsey – My Response to Dave Ramsey’s Article “The Truth About Life Insurance,” Part 1

Posted by:  BeamaLife Editor  on 21 Jun, 2010

Though I am passionate about life insurance, and my career, it takes a great deal to upset me. However, when Dave Ramsey is quoted in any article, I instantly find myself pondering his perspectives on life insurance. While I respect and admire his advice on credit and frugality, the continued dissemination of his viewpoints leaves me concerned for future generations – his misguided notions, if heeded as legitimate advice, could harm the financial futures of thousands of people.  I would like to spend a few weeks going line by line through a recent article of his about life insurance, to shed some light on a subject about which Dave Ramsey is very much in the dark.

Ramsey starts by stating that “cash value life insurance is one of the worst financial products available.” In this instance, I find myself recalling the wise words of my grandfather, who noted that every generalization is both true, and false.

Stephen Covey, in his book “The Seven Habits of Highly Effective People,” wrote that to be successful you must “begin with the end in mind.”  Only then can you decide what road to take to get you there.  Whether or not life insurance is a good choice for you is reliant upon your envisioned “end.” Ramsey’s claim is that, regardless, cash value life insurance is a waste of money – and this blanket claim is, to put it plainly, wrong, sharing the same inherent flaws with which all generalizations are saddled.

In a few days, I’ll talk about Ramsey’s next comment, where he states, “Sadly, over 70% of life insurance policies sold today are cash value policies.”  What’s truly sad is that the other 30% are term life policies.  And next time, I will tell you why.