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If you listen to yesterday's Dave Ramsey Podcast there was a guy calling in who has a wife 10-years younger than him. He needs to decide on his retirement pension if he wants to take $45,000 based on his life only or $35,000 based on him and wife (whoever lives longest.)
The guy was smart enough to know that if he takes the extra $10,000 he needs to see what life insurance would cost on him to protect his wife.
When Dave got ahold of it the only life insurance worth considering is 10-year term. And the numbers don't work out but since the average age of death for this caller is 15-years away (like people want to bet the farm on averages anyway) Dave says "No! Definitely take the $35,000. Don't even consider whole-life because it's a rip off."
This would have been a perfect example to explain why people with a large whole-life policy (or GUL) have a huge advantage when making retirement decisions. This is especially true when the breadwinner is older than the spouse.
If the guy is healthy, he should definitely explore the GUL option if not whole-life. Let's say they could get an amount of coverage on him to protect the wife for $8,000 per year. They are $2,000 better off on day ONE.
Now let's say she dies 10-years into his retirement and he lives an additional 10-years after that. He can cancel the life insurance and be $10,000 ahead from that point on (or sell the policy to his kids.)
What if she runs off with her old high school boyfriend 2-years after he retires. With Dave's plan he is locked in to $35,000 for the rest of his life because he protected her. With the life insurance option, he cashes out and has $10,000 per year extra.
You have to hand it to Dave. All roads lead to buying more of his books, seminars and websites. Terrible advice to the masses though.
The guy was smart enough to know that if he takes the extra $10,000 he needs to see what life insurance would cost on him to protect his wife.
When Dave got ahold of it the only life insurance worth considering is 10-year term. And the numbers don't work out but since the average age of death for this caller is 15-years away (like people want to bet the farm on averages anyway) Dave says "No! Definitely take the $35,000. Don't even consider whole-life because it's a rip off."
This would have been a perfect example to explain why people with a large whole-life policy (or GUL) have a huge advantage when making retirement decisions. This is especially true when the breadwinner is older than the spouse.
If the guy is healthy, he should definitely explore the GUL option if not whole-life. Let's say they could get an amount of coverage on him to protect the wife for $8,000 per year. They are $2,000 better off on day ONE.
Now let's say she dies 10-years into his retirement and he lives an additional 10-years after that. He can cancel the life insurance and be $10,000 ahead from that point on (or sell the policy to his kids.)
What if she runs off with her old high school boyfriend 2-years after he retires. With Dave's plan he is locked in to $35,000 for the rest of his life because he protected her. With the life insurance option, he cashes out and has $10,000 per year extra.
You have to hand it to Dave. All roads lead to buying more of his books, seminars and websites. Terrible advice to the masses though.
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