BeamaLife Blog

It isn’t often that I get upset about things. But every time I hear someone quoting Dave Ramsey, I think about his ideas on life insurance.  And that makes me quite CONCERNED about the next generation American.  I am a fair person and admire his advice on credit and frugality, so I’m not going to say that he offers nothing of value in his financial advice.  As my grandfather used to say, “even a stopped clock is right twice every day.” 

But when it comes to advice about something as important is life insurance, not only is he pretty far off the mark.  I would go so far as to assert that he’s hurting the financial futures of thousands of people who, not knowing the real story, might take his advice.  And I’d like to spend a few weeks going line by line through his article shedding some light on a subject that he’s very much in the dark about.

Ramsey begins his article with the following assertion: “cash value life insurance is one of the worst financial products available.”  Now, I know that anyone who wants to be on TV has to be willing to state an opinion with certainty, and that means making a universal statement about something.  Anyone who is supposed to give advice should have a strong opinion. 

But in this case, Ramsey’s comments make about as much sense as an expert on hardware saying “the screwdriver is one of the worst tools you can buy at a hardware store.”  That sounds pretty foolish, right?  I mean, if you have something that you need to screw together, can you think of a better tool?  I’ve never tried using a hammer on a screw, but I’m pretty sure the results would NOT be pretty. 

My grandfather also used to say “every generalization is true, and every generalization is false, including this one.”  I’ll give you a minute to think about that one…because in every generalization, there’s also a bit of truth, but there’s never the whole truth.

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 among the universe of financial products depends on what your “end” is. 

Ramsey’s claim is that regardless of what YOUR end is, cash value life insurance is a waste of money.  And that’s just plain wrong.  You need the right tool for the right job, just like you need a screwdriver for some things, and a hammer for others.  In a few days, I’ll talk about Ramsey’s next comment.  He writes “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!