Move Over Dave Ramsey

I respect Dave Ramsey. He has done a lot of good things helping people manage the debt monster. However, like many radio and TV personalities, he has to take some controversial positions to stir the pot. His position on life insurance is one such position he is just wrong about.

Dave’s position, as I understand it, is the only life insurance you should ever buy is term insurance. The idea is it covers the need for insurance while you focus on paying down debt and growing assets. He claims if you follow his system you will not need life insurance later in life. I think a simpler way to say this is buy term and invest the rest.

I submit that buying permanent insurance that builds cash value is a better approach for many people.

Here is an example of using life insurance throughout a person’s lifetime. What is described below is real although perhaps not your everyday situation. It does illustrate the many advantages of cash value permanent life insurance.

We have a newborn where the parent or grandparent has funded through gifts of $13,000 a year for 17 years!

That’s IT! Never paid a nickel more in premium, loan interest, loan repayments etc.!

We used a MassMutual 20 Pay Whole Life contract, but elected Reduced Paid Up (RPU) Insurance after the 17 years of payments. Total payments into the policy equal $221,000.

At age 18, the policy owners withdrew $30,000 a year for college tuition for 4 years. This is $120,000 of cash withdrawals from the policy.

At age 30, a onetime withdrawal of $50,000 is made for a down payment on a house.

For the next 36 years, the policy stays in force and builds cash value based on the guaranteed interest and non-guaranteed dividends paid into the policy.

At age 66, the insured starts a retirement income stream of $250,557 per year for 20 years. This results in total retirement withdrawals of $5,011,140.

At age 85 the insured stops the income stream. The owner still has $1,516,025 of net cash value and a net death benefit of $4,191,146.

You don’t have to be a math whiz to realize that the owner paid $221,000 into the policy, and withdrew $5,191,000, without depleting the cash value. The policy is still in force and has cash and death benefit left at age 85.

So what would this look like if the owner took the same $221,000 of the premium and invested in a moderate mutual fund that compounded at 5% for 50 years? it would grow to $2,534,295). This of course also means you had no access to the money for those important college and housing expenditures.

To be fair the interest is guaranteed in a whole life policy and the dividends are not, so it is theoretically possible that the growth will not be this robust. The dividends can fluctuate more than this illustration shows. The return on the alternative is also not certain over time.

Don’t have $13,000 for $17 years? How about $1,000 or $5,000 for 10 years? The concept works.

Life Insurance IS for Everyone

Life insurance is the only cradle to grave financial instrument. It is for pure protection, an additional savings vehicle, an emergency fund, a college planning tool, a supplemental retirement income stream or all of the above.

As pure protection, life insurance obviously first provides a cash payment to those we leave behind. Most policies these days have options that allow the insured to use the part of the face (benefit) amount for use while still living. This is useful when paying out-of-pocket for medical treatments, long-term care or hospice care.

Beneficiaries (the recipients of the policy proceeds), have the option of taking a full cash payment or as an annuity, which is a stream of payments. Each beneficiary chooses the option that is best for their needs.

Some pure protection policies are low face amount policies, usually under $30,000, that are meant for end of life expenses only. These are the costs of funerals, estate transitions and final medical bills.

Insurance payments, called premiums, are based on the face (benefit) amount, the term (length of coverage), age, gender, tobacco use and health of the insured. Other factors that can affect the premium are lifestyle issues such as avocations like auto racing, scuba diving, rock climbing etc. Certain occupations may also impact the premiums.

Life Insurance policies can be purchased at any time up until age 85 depending on the policy. Also, depending on the policy, the policies stay in force until age 120.


Estate Planning and College

Many students are going off to college at this time of year. A great deal of planning goes into the first year of college.  There is usually hustle and bustle getting the necessary items, laptops, clothes, bedding, shelves and other dorm room essentials. Then there is the road trip and the inevitable emotional goodbyes.

An often overlooked item for a new college bound student is a health-care or medical proxy. As parents we still think of our 18-year-old children as children regardless of how adult they might be.  We forget that we do not have the same legal rights as parents once they are legally adults.

In these days of HIPAA privacy rights, a sick or injured son or daughter would have to give permission for the parent to have access to medical information. If the child is incapacitated, getting that permission becomes much harder. It is prudent to take care of this before a problem arises.

A health-care proxy, prepared in advance, allows a child to appoint the parent(s) as the proxy (or agent). The health-care proxy is best done with a living will, which allows the student to give directions about life extending medical procedures. A signed HIPAA form is also suggested as part of the package.

A completed and executed durable power of attorney authorizes the parents to manage financial affairs and sign legal documents on behalf of the student.

Also suggested is a will to spell out what happens to any assets owned by the student in the event of his or her death. Most college students have few possessions, but the will can be used to name beneficiaries of these and other assets.

Be sure to distribute copies to all parties as soon as they are completed.

The most affordable solution I have found for these and many other legal issues is LegalShield.

While not part of an estate planning scenario, if the child is still part of the family medical insurance, parents should explore any limitations of coverage that may come into play if the student is out-of-state or takes some courses abroad.


Tax Identity Theft Awareness Week

Did you know the Internal Revenue Service has paid out $5.8 billion in fraudulently filed income tax returns?* January 25-29 is Tax Identity Theft Awareness Week. As leaders in the legal and identity theft services industry, LegalShield has teamed up with DocuSign and Liberty Tax to offer complimentary educational resources.

These three companies offer world-class customer experiences in which trust, privacy and security play critical roles. They have announced the launch of ‪#‎ProtectYourID, which is an advocacy campaign for educating consumers and businesses about how they can better protect their data, information and identities this tax season. They are providing steps we can take if our privacy or security are compromised.

As part of #ProtectYourID, Liberty Tax, DocuSign and LegalShield each will host webinars that offer best practices to consumers and businesses for protecting data, information and IDs, including:

“Safeguard Yourself Against Identity Theft and Fraudulent Tax Filings,” presented by Liberty Tax, Wednesday, Jan. 20, 2016, 11 AM CST. Recording is available now

“Protecting Your Data, Information and Identity from Cyber Criminals,” presented by Tom Pageler, Chief Risk Officer, DocuSign, Wednesday, Jan. 27, 2016, 11 AM CST.

“Anatomy of a Scam,” presented by LegalShield, Wednesday, Feb. 10, 2016, 11 AM CST.

Visit to register for any of these webinars. There will be replays available.

LegalShield, along with our partner Kroll, offer the IDShield guarantee. Every day. Every Hour. Every Second. We do whatever it takes for as long as it takes to restore your identity to its pre-theft status. You have our $5 million service guarantee.


It’s That Time

We live in troubled times. I think times are always troubled. Such is the nature of life.

We live in wondrous times. I believe we always live in wondrous times. Such is the nature of life.

Pick one of these statements and run with it.

If what you focus on expands, I wish for you at this time of the year, and always, that you choose the second statement. That choice will change the times for you and for everyone you hold dear.



Transitioning Awareness

As we leave behind Life Insurance Awareness month and enter into Breast Cancer Awareness month I thought this video story would be appropriate. Life insurance is not an expense, it’s an investment. An investment in peace of mind, in fulfillment, in lifestyle and yes it could also be an asset class. For the good of those you love and those who love you be sure to have life insurance on your must have list.


Life Insurance – The Final Loving Act

This video says it all.


Labor Day

According to the Department of Labor, “Labor Day, the first Monday in September, is a creation of the labor movement and is dedicated to the social and economic achievements of American workers. It constitutes a yearly national tribute to the contributions workers have made to the strength, prosperity, and well-being of our country.”

All American workers have benefited from the organized labor movement in this country. Paid time off, safe working conditions, and minimum wage laws are all the result of organized labor. Contrary to what some would have you believe this did not make American businesses uncompetitive. In fact it created the largest economy in the world.

So celebrate the American worker.Labor-Day


I Can’t Afford It

This is the most frequent answer to the question do you have life insurance? This is sometimes true. More commonly the real answer is I choose not to allocate my spending toward life insurance.

So who is counting on you to have life insurance?


The Biggest Threat to Identity Theft is

Telling yourself you are not at risk. There may have been a time that we had more control over who has access to our information. Those days are gone. If you were ever in a hospital, or doctor’s office, filed taxes, went to school, have a driver’s license or a job, have a bank account or an insurance policy, you’re at risk.

Focusing too much on the financial aspects, such as credit cards and credit scores lulls you into a false sense of security since only twenty percent of ID theft involves those aspects.

IDShield is the most comprehensive identity theft product available on the market today. And now with our MemberPerks program you have access to discounts from over 480 well-known brands that could make the cost of ownership $0.

Go here for more information.

See the article by a former State Director of Consumer Affairs


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