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For over 20 years I have worked personally with Dave Ramsey, his listeners and team members to help them make important and informed decisions about their insurance needs and the most cost effective ways to address them. Through the years I have responded to over 10,000 of Dave’s listeners regarding their insurance questions.

This blog contains many of the most frequent questions and answers since they provide an excellent resource to Dave's specific advice on very specific insurance questions. I hope you find this information to be a valuable resource that you can refer to many times in the future as you progress along your financial path. Click on the category noted which relates to your question so that you can see the posting currently available. If you do not see your question or still have concerns please don't hesitate to use the "Question Widget" noted on this site for further information or call us toll free at (800) 356-4282.

Many people are surprised that the advice from Dave and I doesn’t always involve the purchase of insurance as the only alternative. Insurance is a key component of any family's financial plan but it can also be a drain and a detriment if the wrong plans are purchased. Implementing the plans and approaches that Dave and I recommend, most importantly, the establishment of an emergency fund, will help reduce a families overall insurance costs and allow them to focus their dollars on more important things such as getting out of debt and growing wealth.

− Jeff Zander

What is the Suicide/Contestability Clause?

2014 January 24

The Suicide/Contestability Clause states that if a person dies during the first two years of their life insurance policy, their beneficiary will not receive the funds of the policy, and the company will refund the premium to the insured’s estate. After an individual has had their policy for two years, this clause no longer applies.

The clause also states that, if an individual dies within the first two years of their policy, the insurance company may verify the accuracy of the information received in the application and/or underwriting process. If any information is found which would have caused the company to decline the application if it had been disclosed, the company may deny the claim and return the premium payment.

Check out more answers to frequently asked term life insurance questions.

Are Life Insurance Premiums Guaranteed Not to Change?

2014 January 22

All the plans we offer are “guaranteed level,” which means the rates are guaranteed not to change for the time period you select, whether it is a 10, 15, 20 or 30-year period, as long as the premiums continue to be paid. The policy locks the company into keeping the rates consistent, and you only need to pay the premium for the length of time you want the coverage. If you purchase a 30-year plan but decide after 20 years you don’t need it anymore, you can simply cancel the policy and no further premiums are due. The guarantees are there to protect you against companies making changes to their plans once the policy is in force. This is one of the main benefits of choosing term life insurance. Read about other advantages of term life plans.

Should Term Life Insurance Be Part of a Divorce Settlement?

2014 January 22

You should ask your attorney to have a term life insurance plan as part of your settlement, especially if you will be reliant upon your former spouse for support into the future. The court will create the “need” since you cannot apply for a policy without their participation in the application process. Your soon-to-be ex-spouse will have to complete and sign the application as well as take a brief paramedical exam to determine their own eligibility and cost. If there is a mandate to do this via the divorce decree, you can be assured that they will participate at this level. You will also want to make sure that you are listed as the owner of the policy so that you are the only one that can change the beneficiary designation and are notified in the event that the premium is not paid.

Do I Need Life Insurance for My Whole Life?

2013 September 6

The answer to this question is an emphatic NO! The insurance industry has done an excellent job over the decades creating and reinforcing the concept that you need life insurance for your “whole life” (hence the name of their most popular product). The reality is that you need life insurance only for a period of time during which your family cannot maintain their financial lifestyle due to debt or a lack of savings. By purchasing term life insurance, your rate is locked in for the time period you choose, you are able to free up funds that can be used to pay down debt, establish your emergency fund, and grow your savings. It makes little sense to overpay for a product now (whole life) so you can have protection in later years – when you shouldn’t even need life insurance at that point! Remember – as you are attacking debt and increasing your savings, you are on a path to reducing and eliminating your need for life insurance altogether so that in the future, those funds can be used more effectively through other investment options. There is no financial justification of spending dollars on a product you no longer need just to get a certain rate of return. The expense of the insurance draws away from the true investment value you receive which is poor to begin with. In addition, since your savings and emergency fund should be established by this point, any final expenses or burial costs should be paid from these funds. Learn more about the “Term vs. Cash Value” debate.

How Does the New Federal Healthcare Law Affect Me?

2013 April 1

There are many elements to the new federal healthcare law, known as the Patient Protection and Affordable Care Act (PPACA). Health plans no longer having maximum lifetime benefit limits or mandatory preventative care services The “individual mandate” that went into effect in 2014 is no longer a federal requirement, though some states uphold this law (MA, NJ, VT, CA, RI, and DC). This requires consumers subject to this law to purchase health insurance which meets a benefit standard set by the federal government or be subject to a tax penalty.

If your employer provides group health insurance benefits, it is likely that your plan will meet the mandate requirement since there are guidelines that employers must follow that are based on benefit design and affordability (or they, too, would be subject to penalties). If your employer does not provide health insurance and you live in a state that upholds the individual mandate, you must purchase a plan and provide proof of coverage to avoid penalties. Your employer is also required, if offering a health plan, to have the employee contribution for single coverage not to exceed 9.5% of their wages or they could be subject to penalties.

Insurance companies can no longer limit, exclude, or deny coverage or charge higher premiums for pre-existing health conditions, expanding your access to plans if you have any such conditions. In addition, PPACA has established subsidies to help individuals and families afford this expense. The subsidies vary by income level and are intended to help within certain poverty level limits reduce their costs to 3-9% of their adjusted gross income.

Visit for the most up-to-date information on policy changes and enrollment.

What Happens to My Policy When an Insurance Company Goes Bankrupt?

2012 November 6

Thankfully, we have only read about this experience and have never had one of the companies we represent go into bankruptcy (or insolvency, which is the term used in the insurance industry). If an insurance company goes bankrupt or is otherwise unable to pay its claims, there is a safety net in each state – known as a guaranty fund – which works similar to the way the FDIC protects deposits in banks. Each state charges insurance companies a tax on their premiums that goes to an insolvency fund that would pay claims up to a certain limit if the company is financially incapable of doing so on their own. The company is then taken over by the Insurance Department of the state in which they are domiciled and goes through a period of rehabilitation. This generally involves the Insurance Department reorganizing the company, and in most cases, finding a new company to buy the assets of the failing company. If the assets being bought do not generate enough to cover the liabilities of the company, the guaranty fund makes up the difference and, in most cases, the insured person is made whole and their policy or claim protection continues. In the event that no buyer is found, the company’s assets are liquidated, and the guaranty fund provides protection up to the state limit for those with a pending claim or outstanding premium. This is a very rare event and the advantage of term insurance is that you do not have a lot of money “invested” in a failing company (like you would with a cash value type plan), and you could simply apply elsewhere. In short – it is definitely an experience to avoid, but having a term life policy greatly minimizes some of the complications.

Should I Purchase Additional Term Coverage Outside of My Employer’s Group Plan?

2012 November 6

If your employer is paying the cost of your life insurance plan, it is only to your benefit to accept it. If you have to incur a cost, you should certainly compare it with the cost of the other plans outside of the group. These plans are often tricky, as they can have a simple enrollment process but not be cost-effective for you in the end. Even if your employer plan has cost benefits, Dave advises having no more than 50% of your coverage through your employer since most plans are not portable. Therefore, if you leave that job, you will either lose your coverage or will have to medically re-qualify at a time when you need the coverage the most. If your plan is convertible, that typically means you can take it with you, but will have to change to a cash-value plan, which Dave is adamantly against and should be avoided unless you cannot qualify for a term life plan individually. Many group plans also have benefit reductions as you get older, usually dropping the benefit coverage when you reach age 60 or older. Though employer group rates may be lower, the pricing of these plans tend to only be guaranteed for two-year periods, compared to the level-term plans Dave recommends of 15 or 20 years. Compare rates for free online or call us toll-free at 800-356-4282 to speak to a Guide.

Learn more about why your employer’s group plan is not enough.

Should I Buy Life Insurance Instead of Selecting the Survivorship Option on My Retirement Plan?

2012 November 6

This approach is typically referred to as pension maximization. This is often done by people who do not want to have the reduction in their monthly benefit that occurs if they select a survivorship benefit or they do not have survivorship benefits as part of their pension. By purchasing a life insurance policy, the beneficiary receives the death benefit instead of a continued monthly income, which allows the primary retiree to receive the higher income as long as they are alive. This approach works quite well as long as you can qualify for a term life policy based on your health and you use the savings generated by not buying a cash value plan to create a savings account in the event that you outlive the term policy.

The primary purpose of the plan is to buy term and invest the difference to create a fund that will replace the life policy when it expires. You really don’t need an amount longer than 20 years since the growth of your savings plan will offset the need for life insurance into the future. You just need to make sure the amount of coverage you initially purchase is enough to generate the lost income you will not receive from the pension if you were to die.  If you have enough savings to replace the lost income after you buy the term insurance and invest the difference, then the strategy works. There are times, however, when the math doesn’t come out and taking the survivorship option is the best (usually due to health issues or other factors that may drive up the cost of insurance).

Working on creating a policy that works for you? Check out 5 Term Life Insurance Mistakes to Avoid.

How Does the Suicide/Contestability Clause Work?

2012 June 8

The Suicide/Contestability Clause applies during the first two years of a term life insurance policy, and states that, during this time period, a company has the right to verify the information submitted in the application/underwriting process. If any information is found to be untrue or omitted and would have caused the company to decline the application, the company reserves the right to deny the claim. In this case, no death benefit would be paid and the company would refund the premiums paid.

This clause also states that if the cause of death is suicide, the beneficiary will not receive the funds of the policy – this still only applies during the first two years. After that timeframe has passed, this rule no longer applies.

View more answers to frequently asked term life insurance questions.

Are Recovery Advocates Licensed Investigators?

2012 May 15

While no certification is required to resolve any identity theft issue, our recovery advocates are CITRMS (Certified Identity Theft Risk Management Specialist) certified through the ICFE (Institute of Consumer Financial Education). We also require all our recovery advocates to complete the Identity Theft Victim Assistance Training, sponsored by the Department of Justice.

These industry-specific certifications enhance awareness of the particular presentations of identity theft, thereby more effectively training the recovery advocates in detecting identity theft and fraud issues to help them better assist you in all matters, from detection to resolution.

Worried you may have had your identity stolen? Read more about common signs you may have been a victim of identity theft.