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Dave Says: Avoid any type of life insurance with a built-in savings program

(AP Photo/Andrew Harnik, File)

Dear Dave,

What kinds of insurance should I avoid?

– Rhonda

Dear Rhonda,

Well, in the life insurance world, you should buy only term life insurance. Avoid any kind of insurance that has a savings program built into it — things like whole life, universal life and variable life. Another thing to avoid is return of premium. This is where an insurance company charges you extra, but gives all your premium money back if you don’t use the policy. It sounds good, but if you’d just invest the extra you pay for that stuff, you’d get all your premiums back, and more, whether you used the insurance or not!

I also don’t recommend gimmick insurances, like double indemnity for accidental death. Think about it. You’re not double-dead if you die by accident; you’re just dead. Your family needs the same amount of money whether you die by accident or heart attack. If you have a family, I suggest 10 to 12 times your annual income in a good, level term policy. Also, stay away from cancer insurance policies. Your regular health insurance policy should include cancer coverage. If it doesn’t, you’ve got a crummy policy and you need to get a better one right away.

So, for the coverage you do need, we’re looking at level term life insurance, good health insurance, long-term disability and homeowners and/or renters insurance. Throw in auto coverage and, once you hit age 60, long-term care insurance and you’re pretty much set!


Dave Ramsey is America’s trusted voice on money and business, and CEO of Ramsey Solutions. He has authored five New York Times best-selling books. The Dave Ramsey Show is heard by more than 11 million listeners each week on more than 550 radio stations and digital outlets. Dave’s latest project, EveryDollar, provides a free online budget tool. Follow Dave on Twitter at @DaveRamsey and on the web at

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