If you have loved ones depending on your income, you need term life (never whole life) insurance worth 10–12 times your income for 15–20 years. Here’s the best way to get it:
Just plug in your info to compare the best term life policies for your coverage needs from the top-rated companies.
You’ll fill out an online questionnaire—but you’re not applying just yet. It helps our trusted partner prep your application.
You’ll get a quick call from Zander Insurance so they can breeze you through the application. And as always, their help is free.
That’s right—RamseyTrusted. And it’s a big deal. It means Zander is the only company Dave and the entire Ramsey team trusts to help you find term life insurance. They’ve faithfully served over 600,000 folks in the last 25 years. And they’ll help you find the right policy too.
Zander only shops term life—a way better deal than whole life insurance (Why? Because you only pay for what you need.)
If you’re young and healthy, there’s a good chance you can get a policy without needing a physical. (No needles!)
You’ll see the best term life insurance rates for your needs (all in one place) when Zander shops for you. (It’s free!)
You should buy life insurance when someone depends on you to provide income or when you’re a stay-at-home parent (replacing everything you do would be expensive!). That’s why many people buy life insurance when they get married or have a baby. But even if it’s been a while since those events happened, you still can (and should!) get term life insurance.
Life insurance is only supposed to do one thing: replace your income if you die. If it tries to do anything else (like invest your money), it’s a total rip-off. That’s why we only recommend term life insurance.
Term life is also way more affordable since it’s for a set number of years and doesn’t try to act like an investment. Your best option is to get a 15- or 20-year term policy and invest the difference you saved (by not getting rip-off life insurance) into good growth stock mutual funds. That way you can focus on paying off debt and building wealth.
Term life insurance protects your family’s financial future if you pass away. You’ll buy a policy that lasts for a set number of years, or term. If you die during the term, the insurance company will pay a death benefit (aka payout) to your beneficiary. Then that person—or group of people—can use the payout to cover your end-of-life costs, debts or their own living expenses.
Well, at this point we hope you’ve gone through the Baby Steps and don’t need life insurance anymore. Instead, you can be self-insured by the time your term ends!
"What in the world does that mean?" you may be asking. That just means you have enough money for your family to live on after you’re gone and you don’t need life insurance anymore.
The insurance industry has convinced the public that you need life insurance for your whole life—but that’s simply not true! You only need life insurance when your death would cause your family financial hardship. By the time a 15-, 20-, or 30-year term policy expires, it’s likely your family won’t need life insurance anymore (because your kids are out of college and not dependent on your income).
But if you do still need life insurance for a little longer (until you’re self-insured)—no problem! Most term life plans are guaranteed renewable to age 90 or older, so they don’t really expire. But keep in mind: Once your original term expires, the cost of the policy keeps going up.
The policy length, payout and cost are different.
Policy length: Term life insurance lasts for a set number of years (we recommend 15- or 20-year terms). Whole life insurance lasts for your whole life.
Payout: Term life insurance has a set payout, so the amount listed on your policy is how much your family will get.
But whole life insurance is a cash value policy. That means the insurance company invests part of your premium. (Don’t get too excited—those investments don’t grow much.) You only get the cash value if you live to the company’s maturity age (usually 120 years old). If you die sooner, your family gets a predetermined payout, and the insurance company keeps the cash value. (If it sounds like a rip-off, that’s because it is.)
Cost: Term life insurance costs 10 to 15 times less than whole life insurance . . . but you get more coverage.
You need a life insurance policy worth 10 to 12 times your annual income. You can use our free term life calculator to find out exactly how much that is.
If you’re a stay-at-home parent, you need a policy worth $250,000–$400,000. That will help cover the costs of childcare, housekeeping, tutoring and everything else you do in a day. (Seriously, you are awesome!)
We recommend 15- or 20-year terms. A good rule of thumb is to have enough life insurance to cover your last financial obligation (for example, until your youngest kid is out of college). It keeps your family’s finances protected while you work on saving and investing.
In fact, if you work a good financial game plan, you can become self-insured by the time your term ends. That just means you have enough money for your family to live on after you’re gone and you don’t need life insurance anymore.
Yes—if you want to and you meet the insurance company’s criteria. Typically, that means you’re generally healthy, between 18–65 years old, and need less than $1 million of life insurance coverage. If you’re older or have certain health conditions, you might not qualify to skip the medical exam with most insurers. And if you make more than $80,000 a year, you’ll probably need more coverage than a no medical exam policy will offer.
Our friends at Zander Insurance can help you find a no medical exam provider if you qualify. We’ve got an article you can check out if you want to learn more about no medical exam life insurance.
Let's start by saying we never recommend keeping a cash value policy. This includes whole life, universal life and variable life insurance. The only time when we would tell you to keep one of these policies is if you don’t qualify for a term life plan. However, those cases are few and far between.
If you qualify for term (which most adults do), it’s time to make the switch. Here’s why: Companies selling you cash value plans want you to think you need life insurance your whole life because they get to charge you more that way. But if you follow the Baby Steps, you won’t need life insurance for your entire life because you’ll be self-insured within 15—20 years.
If you do have a cash value life insurance policy—don’t stress! (We all get talked into things we might later regret.) Just reach out to your provider and cancel your policy with them.
The good news is that if your policy has a cash value you can now use that cash to fuel your Baby Steps! Here’s a tip: Most companies will tell you to expect a big tax penalty when you try to cancel, but there’s rarely any tax. And if there is, it’s only based on the amount you get back above and beyond the premiums you paid.
But here’s the key takeaway: Never cancel your policy until you have a new term life insurance policy set up!
Yes! Stay-at-home parents do a lot of work, and it would cost tens of thousands of dollars to hire someone to do those tasks. We recommend that stay-at-home parents have a term life insurance policy worth $250,000–400,000.
Life insurance companies can deny you if they think you’re at high risk of passing away because of health conditions or unhealthy habits. But if you get denied for coverage, there are still ways you can get the life insurance you need.
But make sure you double check that you’re actually uninsurable. Just because you got denied coverage by one company doesn’t mean there aren’t others out there who might consider your application.
The advantage of working with an independent agent like Zander is that they can also help you shop companies who specialize in higher risk individuals and can usually help when other companies or agents can’t.
15 MIN READ | DEC 18, 2023
Reviewed by Jeff Zander
The best type of life insurance is called term life insurance (also called pure life insurance), and it guarantees a death benefit if you (the insured) die during a period of time that you specify—the term. Get it? Term insurance. Very clever. If you die after the term is over, the insurance company doesn’t pay. Pretty simple.
Another important thing to know about term life insurance is that it has no cash value like a whole life insurance policy. And that’s actually what makes term life insurance a much better deal than whole life. You’re only paying for life insurance—not some wonky cash value account that grows slowly (like over your whole life). This way, you can invest those premium savings and build real wealth instead. (More on all that a little later.)
RamseyTrusted partner Zander Insurance will get you rates from top life insurance companies and pair you with the one that fits you best.
So, how does term life insurance work, exactly?
For starters, the insurance company looks at your age, health, death benefit amount and term length to calculate the cost of your policy. Then you make premium payments for the length of the policy.
The best way to explain term life insurance might be for me to give you an ideal example of a life insurance policy.
Let’s look at our friend Steve, a healthy, nonsmoking 30-year-old who makes $50,000 a year. Steve’s death benefit is $500,000 because you need coverage that’s 10–12 times your yearly income. His term length is 20 years.
If Steve gets his toast out with a fork and dies a shocking death (sorry, that joke was a little dark, not unlike Steve’s toast) before his 20-year term is over, the $500,000 (his term life insurance benefit) will go to his beneficiaries (his wife and two kids). If he’s alive when his term life policy expires, Steve could renew it, but he’ll have to pay higher premiums because he’ll be older and more expensive to insure.
Whole life insurance (aka permanent life insurance) is in place for your whole life. And while I hope it’s a long and prosperous one, that’s a lot of premiums to pay—and high ones at that!
Why are whole life premiums so high, you ask? Because whole life insurance tries to act like a savings or investment fund (along with others in the cash value insurance family, like universal life insurance), but (spoiler alert) it does a really bad job!
Part of the sales pitch for cash value types of insurance is that they’ll help you build up an investment that could be tapped further down the line. Here’s how it’s supposed to work: You overpay in the early years to build up your cash value. Then as you get older and your premiums go up, you use your cash value to help pay for your insurance.
But here’s the reality: Whole life sucks compared to term life when it comes to growing your money.
Let’s go back to our good friend Steve. He likes to dabble in the stock market, and his insurance agent says if he goes with whole life insurance, his premium will cover his life insurance policy and include investing.
What the agent doesn’t tell Steve is the growth of the cash value in a whole life policy is awful. He’d be way better off going with term life and investing the money he’ll save on the premium into good growth stock mutual funds. That’s because the rates of return for whole life insurance policies are really low compared to the rate of return for mutual funds.
I want you to think of whole life policies as the timeshares of the life insurance industry—they’re just one big scam meant to make other people wealthy—not you.
