Don’t waste money on whole life insurance. Get a term life policy today:
SUMMARY
Jonathan from Lexington, KY is in Baby Step 2 and is working to pay off $92,000 in consumer debt. His mom took out a whole life insurance policy on him when he was born and has been paying on it now for 27 years. He asks Dave if he should ask his mom to cash out the whole life policy worth $7,300 and put it towards paying off his debt.
Since Jonathan is the owner of the whole life policy now, Dave tells him he can cash it out whenever he wants. Unfortunately, his mom paid way more than $7,300 for the policy, so it’s a loss either way. That’s what makes whole life policies a scam – you pay way more than what you get out of them.
Whole life insurance is NEVER a good idea. You’re ALWAYS better getting 10-12 times your income in term life insurance. You’ll pay significantly less for the life insurance, and you can invest the rest of your money in mutual funds, where it builds interest separately.
If Jonathan’s mom had done this, he could have $73,000 saved up in 27 years rather than $7,300. The difference is huge. Get term life insurance today:
RESOURCES
Make sure you have enough insurance with the 5 Minute Coverage Checkup:
Learn more about whole life vs. term life insurance:
Life insurance is NOT an investment. Watch Dave explain:
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