Dave Ramsey May Be Wrong About Life Insurance

what Dave Ramsey says about indexed universal life

For those of you familiar with Dave Ramsey and his opinions about life insurance, you may find it interesting that he’s not licensed to sell life insurance. 

It is kind of funny when people ask me if we have The Dave Ramsey Life Insurance plan?

Since Ogletree Financial is a life insurance broker for all of the top life insurance companies, of course we have the Dave Ramsey Life insurance plan.  You can see who the best companies for term life insurance are by getting a life insurance quote.

Our quotes will include top companies like Transamerica, American National, North American, Protective, Prudential, Lincoln National and Assurity Life.

Some of the companies you will see quoted will need to complete a medical exam (which is free to you) and some companies will issue you life insurance with no medical exam.


life insurance policy genius


It is important to know what underwriting is needed when you apply for life insurance and what you will be asked during the application process.  There are some tips to passing your life insurance medical exam, you just need to know what to expect.

Dave Ramsey Life Insurance Recomendations

Now Dave doesn’t really agree with our stance on IUL insurance but we all have opinions.

An IUL policy can be great for building tax-free income and usually purchased by high income earners and people that have maxed out traditional retirement plans.

Although Dave Ramsey doesn’t sell life insurance, he does recommend purchasing term life insurance through the Zander Life Insurance Agency.

Term life insurance can be purchased in level term lengths of 10, 15, 20, 25 and 30 year term periods.

As I mentioned above, we happen to represent all of the Dave Ramsey life insurance companies and can help you get a quote instantly.

You may also want to consider a no medical exam life insurance policy.  We offer the best carriers and we can actually get up to $1,000,000 of life insurance coverage with no medical exam.

Dave Ramsey Life Insurance Rates>>> 

Dave Ramsey has done a super job of marketing his classes.  He has done wonders for people just like me and  you to get out of debt and build wealth through mutual funds.  Some of his most popular work can be found on his website and include:

So along with all of Dave’s financial classes and courses, he has mobile apps and audiobooks.  I especially like the fact that he has partnered with his daughter, Rachel Cruze to grow his message.

Dave has made it super easy to access his materials and even teach a class on his philosophy.  If this is too daunting for you, he offers a group of speakers available for hire.

Here is a current list of The Dave Ramsey Speakers Group:

Rachel Cruze, Chris Hogan, Christy Wright, Anthony Oneal and Ken Coleman can all be hired to deliver the Dave Ramsey message to practically anywhere in the country.  A very diverse group including #1 New York Times Best Selling authors, motivational speakers and financial specialist.

I feel that Dave has a pretty good understanding of term life insurance.  On the other hand, when it comes to permanent life insurance, Dave Ramsey is wrong.

Do you know what Dave Ramsey says about indexed universal life insurance?  

He bases his negative opinions about life insurance on the theory that people who take his class called Financial Peace University for $129 will learn to amass a fortune in cash by eliminating debt and living on the cheap. 

Please don’t misunderstand, I respect Mr. Ramsey because his financial advice is based on scripture and will help most consumers to learn to live within their means. In my opinion, where Dave veers off course, is when he recommends to his audience that they forgo life insurance if at all possible. 

One of Dave Ramsey’s least favorite life insurance policies is indexed universal life and he only recommends term insurance at all because it is so cheap.

When it comes to life insurance, Dave Ramsey’s life insurance advice is off the mark. Sure, I get that whole life can be a bad choice early in life when trying to get out of debt and save for retirement, whole life is expensive.  I would certainly commit to doing the research or contact a life insurance broker before you go out and replace your life insurance policy.

What Does Dave Ramsey and Suze Orman say about whole life insurance?

Dave Ramsey and Suze Orman on life insurance both have similar opinions about term versus whole life insurance.

You can see here that Dave Ramsey dislikes whole life insurance and endorses term life insurance:

Cheapest Term Life Quote >>>

I feel that Dave has a pretty good understanding of term life insurance and whole life insurance.

He certainly paints a harsh picture of whole life.

On the other hand, when it comes to indexed universal life insurance, Dave Ramsey is wrong. 

When purchased for the right reason and structured properly, IUL can be a great way to supplement mutual funds, 401k, IRA, SEP IRA and Roth IRA used for retirement.

An IUL policy can also play an important role in estate planning, mortgage protection and wealth transfer.

what Dave Ramsey says about indexed universal life

Dave Ramsey on indexed universal life insurance

  • What if you die Early? – One of the newer and more popular insurance products that Dave claims “is one of the worst financial products available” is Indexed Universal Life Insurance (IUL).
What Dave doesn't get about Indexed UL
Dave fails to understand that most consumers purchase IUL as an investment vehicle with the added value of having a life insurance benefit; not the other way around.
  • He does believe that mutual funds are worthy of his praise, but fails to mention if you die six months after you open your mutual fund, you are left with less than your investment. With the IUL on the other hand, your beneficiary will receive the death benefit which is tax-free. In either case, life insurance is probably needed and we can help you with indexed universal life insurance or term life insurance.  Sometimes an indexed universal life policy is a consideration, but you are just not ready for the premium commitment. In this case, we can offer a term policy that you will be able to convert to the indexed universal life policy at a later date.

  • Those Nasty Fees – We regularly hear complaints about the fees associated with the IUL, but when you compare it with most mutual funds (which he says is okay), the fees for the IUL are less than half the amount charged by the fund. The reason for the lower fees is because the IUL fees are based on the death benefit, but the mutual fund fees are based on the account value. As your account value increases in the Indexed universal life policy, the amount of life insurance decreases.  This will decrease expenses and fees.  We can show you exactly what the fees are in an IUL policy and then compare that to a mutual fund account. This is what we do for our clients every day.  Don’t just rely on some information that you have read on the internet, let us run a proposal for you so that you can see the real numbers.  For more information about the fees for an IUL policy, call the experts at Ogletree Financial Services or complete the form on the left of this page.
  • Tax Liability – mutual fund earnings are taxed depending upon whether the earnings are considered interest, capital gains, or dividends. This tax liability can significantly reduce your net earnings if you are in a high tax bracket. On the contrary, when the cash account in your IUL reaches a level where you wish to make withdrawals by either taking loans or partial surrenders, these transactions are generally income tax-free.  If you withdraw from your policy to the basis in which you contributed, those are income tax-free and loans against your policy are also income tax free.  If you follow Dave’s method and manage to raise several hundred thousand dollars in your mutual fund, when you die, the account balance could go into your estate and may or may not be a taxable event.  This is dependent on the ownership of your mutual fund account.  Since the IUL is a life insurance product, when you die, the cash value and death benefit are paid directly to your beneficiary (not to your estate) and is delivered tax-free.

Let us prepare an illustration for you so that you can see exactly what you can expect for income when it is time to retire.  You will be in a better position to make an informed decision about your retirement funds and life insurance.  You can be assured that we only use the best companies when we recommend IUL.  Companies like North American, Lincoln National, American National, Minnesota Life, Midland National, Pacific Life, Transamerica and Allianz are all companies that we feel have a great indexed universal life insurance policy.

Dave Ramsay’s mutual funds contain no guarantees!

  • What about the Guarantees? Most investors are looking for a guarantee of some sort. Whether it’s that your account will not be wiped out if the market tanks, or maybe you’ll earn a minimum no matter what. The mutual funds that are built into Dave’s Financial Peace University, contain no guarantees. If the market tanks, so does your account value. And, there is no minimum interest guarantee. Depending on the policy you select, the IUL offers protection against the market volatility by resetting your account value each year. This benefits you by assuring if the market tanks this year, it will not affect the earnings that you have already accrued.One of the most popular IUL’s that we recommend contains a minimum guarantee of 3%.  So in the worst of times, no matter how bad the market performs, you are guaranteed to be credited 3% over the lifetime of your policy. If the market does better than 3% then the guarantee doesn’t even matter.  To my knowledge, this 3% guarantee has never been used by the company. 

No doubt, insurance and investment products can be tricky to understand for most consumers.  It is important that you seek advice from a qualified life insurance agent to help you compare life insurance rates.

Your best chance at earning the returns you expect and insuring your life at the same time, is to contact us for an illustration based on your personal goals. 

Ogletree Financial can compare policies from the best indexed universal life insurance companies.

Speak to an agent at (800) 712-8519 or  

No Exam Life Insurance Quote