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Dave Ramsey says: Young couple ponders type of life insurance to buy

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Dear Dave,

My wife and I are both in our early 20s, we’re debt-free, and we’re just a couple of months away from having a fully loaded emergency fund of six months of expenses.

We both also have 401(k) plans at work, and we’re looking forward to starting additional investments later this year. Right now, we’re trying to decide on which life insurance policies to buy.

I know you always recommend term insurance, but how long should the coverage last? Would you suggest 15-, 20- or 30-year policies?

— Anonymous

Dear Anonymous,

Wow, it sounds like you two are starting your lives together on the right foot. Congratulations on being super smart with your money!

I recommend 15- or 20-year level term policies, unless you have children. I’m assuming kids are not in the picture, since you didn’t mention any.

Then, if you decide to grow your family at some point down the road, I’d advise converting those to 30-year term policies.

The idea behind this is you want the insurance to be there to protect everyone in the family until the kids are out on their own and established.

In the meantime and in the years after, your continued saving and wealth building will lead you to a place where you and your wife are self-insured.

Way to go, guys. I’m proud of you!

— Dave

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