Is Universal Life Insurance A Good Idea?

In this video, Dave Ramsey talks to Cynthia in Charleston. She has an indexed universal life policy with a death benefit and wants Dave to explain if that’s a good way to go.

Dave says not to keep it because of all the fees it will constantly accrue, plus the insurance is expensive. It’s hard to take those investments apart and compare them — when you get investments and insurance together, the investments do not perform as they should.

If you went straight to the mutual funds, you won’t have to pay the fees that come along with insurance.

Usually, the insurance side factors in ART, annual rate of return. The older you get, the more it costs to cover you. And, because its more expensive to cover you each year, less and less goes to investments in this product.

What Dave recommends is Level Term, meaning you pay the same amount each month, which you can get by going and shopping quotes for 10-12x your income.

Once your term life policy in in place, cancel the other policy and invest the difference. Even if you have coverage at work, make sure you have some outside of work in case of a medical event that would make you uninsurable in the marketplace.

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