Make sure you don’t miss this essential.
- Making a financial plan is important for you and your loved ones.
- Dave Ramsey has advice on a key component of your family’s long-term financial plan.
- Following his life insurance advice can help your loved ones avoid disaster if the worst happens.
Making a financial plan is important to ensure you have a secure future. This is especially true if you have people who depend on you.
When making your plan, you need to think long-term and ensure that you are comprehensive and consider all contingencies. However, sometimes doing so can be a challenge.
That’s why it’s so important to listen to financial expert Dave Ramsey’s advice on a key component of your long-term plan.
This advice can help save your family from financial disaster
According to Ramsey, there’s one key thing everyone should include in their planning process to make sure their loved ones are taken care of, no matter what.
“Life insurance is one of the most important parts of your family’s long-term financial plan,” Ramsey said. He also cautioned that while getting this kind of coverage is extremely important, it’s something many people don’t want to think about or talk about.
As Ramsey explained, life insurance is essential because it can save surviving family members from devastating financial loss if the policyholder dies while loved ones rely on his income or the services he provides. “Its purpose is simple: to replace your income for your family if you die,” Ramsey said.
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Life insurance must be purchased before the insured has a decline in health, because otherwise it becomes prohibitively expensive to pay for policy premiums — or coverage may be denied altogether for those with serious pre-existing conditions.
Once a policy is in place, a death benefit will be paid if the policyholder dies during the term of cover and will help ensure that surviving family members can pay the bills and avoid a serious decline in their quality of life. Anyone with dependents needs coverage, according to Ramsey.
“You need life insurance. When you’re gone, those you love will grieve. It’s inevitable. However, leaving them penniless is avoidable. Make sure they’ll be financially secure no matter what,” said he advised.
How to get life insurance
The good news is that buying life insurance doesn’t have to be complicated or expensive, so it should be easy to follow Ramsey’s advice — especially for those who act while they’re still young and healthy.
Ramsey recommends term life insurance coverage, which is in effect for a set period of time, such as 20 years or 30 years. It is generally the best option in most cases because it is priced lower than whole life insurance, which is the alternative to term policies. Whole life insurance offers indefinite coverage, which most people don’t need, and it’s much more expensive because it’s permanent insurance and because it has an investment component.
Consumers should shop around several different insurers to get the best price on a term life policy. And it’s important to get an adequate amount of coverage, which can be determined using the DIME formula. This means buying enough to pay off debt; replace income; cover mortgage payments; and pay for children’s education.
Don’t skip this all-important component of family financial planning — take Ramsey’s advice and look for a life insurance policy today.
Our picks for the best life insurance companies
Life insurance is essential if you have people who depend on you. We’ve combed through the options and developed a best-in-class list for life insurance coverage. This guide will help you find the best life insurance companies and the right type of policy for your needs. Read our free review today.