FROM THE LEARNING CENTER

Dave Ramsey, Suze Orman, and Clark Howard: Life Insurance Advice From Financial Experts

by Bestow Team | September 29, 2021

6 Minute Read

What do Dave Ramsey, Suze Orman, and Clark Howard all have in common? They all recommend term life insurance coverage.

You’ve heard these financial advisors on the radio, seen them on television, or read one of their books touting their best practices for financial success. 

Their advice is tried and trusted, and they have millions of fans who vouch for their advice — including their thoughts on life insurance.

Whether you’re currently researching what kind of life insurance to buy, or you just want to learn more about term life insurance, here’s advice from some of your favorite personal finance experts (and if you’re interested in learning even more about what term life insurance is, you can find that information here.)

Disclaimer: This post is for informational purposes about term life insurance and in no way implies that Dave Ramsey, Suze Orman, or Clark Howard have endorsed Bestow. Content sources are linked throughout the article. Views presented in this article are the opinions of Dave Ramsey, Suze Orman, and Clark Howard and do not represent the views of Bestow or its partners. 

What The Experts Say About Term Life Insurance: 

Dave Ramsey on Term Life Insurance

Every week, 13 million people tune in to listen to The Dave Ramsey Show where he shares his advice to help people become debt free, create emergency savings accounts, and build wealth with mutual funds and other investment accounts.

Dave Ramsey recommends term life insurance coverage for its affordability. Just make sure you have enough coverage — and a long enough term —  that will see your family’s financial needs through. Policyholders often buy coverage that lasts until their kids are in college and living on their own.

And that advice doesn’t just apply to income earners. He recommends stay-at-home moms buy life insurance, too. Why?

“Think about what you would pay in childcare and home upkeep costs if the stay-at-home parent was gone! No matter what, you both need term life insurance.”

Suze Orman on Life Insurance Plans

Best-selling author, award-winning television host, columnist and contributor… What else can we say about Suze Orman? She’s one of America’s top financial experts and a household name.

When it comes to life insurance plans, her advice is clear.

“All you need is term life insurance. Term insurance is very inexpensive, because it will be in place for just a set term — such as a 10 or 20 year term — not forever.”

Suze Orman recommends term life insurance for pretty much everyone who needs to cover expenses for a set period of time: parents with young children who need support until they become independent adults, if you have a spouse or other loved ones who depend on your income, or if you have a mortgage that needs to be paid.

Clark Howard’s Perspective on Life Insurance

Every week Clark Howard helps 3.5 million listeners “save more and spend less” on his nationally syndicated radio show The Clark Howard Show. He’s a best-selling author and television host known for his frugal way of living and helping listeners not get ripped off.

He presents a different way of thinking about life insurance.

Level term insurance only provides a death benefit. It does not have a savings or investing component. It’s like car insurance for your life, but instead of buying it annually or in 6 month increments, you buy it for 20 or 30 years and the premium stays the same during the life of the policy.”

Term life insurance is easy to buy, easy to own, and cheap. This is why he recommends it for both working and stay-at-home parents, and why he prefers that you get your own policy and not depend on life insurance through work.

How Much Life Insurance Do You Need?

This is where our financial experts disagree. You can weigh their opinions, but ultimately your life insurance policy comes down to what’s best for you and your family. 

Dave Ramsey’s Ideal Life Insurance Amount

“We recommend you purchase a term life insurance policy for 10–12 times your annual income. That way, your income will be replaced if something happens to you.”

So, for example, you make $100,000 annually. Ramsey is recommending that you find an insurance policy that is valued up to $1.2 million. 

Pair that with his recommendation for term life insurance – and reading between the lines a bit, a younger person following his advice would get a 20- to 30-year term. 

Suze Orman’s Ideal Life Insurance Amount

Suze Orman’s life insurance advice differs a bit from Ramsey’s. She recommends 20 times income needs with a large death benefit. Most insurance providers will offer this level of coverage, but it may cost more in monthly payments than Ramsey’s advice. 

“Buy a term life insurance policy with a death benefit that is equal to at least 20 times your dependents annual income needs. With such a large death benefit, your dependents will be able to invest the money very conservatively-say in high quality municipal bonds-and live off the income.”

Clark Howard’s Ideal Life Insurance Amount

“When it comes to the question of how much you should buy, people can get crazy with all kinds of complicated formulas. I say simply that you should buy six to ten times your annual income.”

The truth is, there’s no single right answer for everyone.

For some, covering one-time costs is enough because there are other funds (like retirement accounts and pensions) that could cover day-to-day expenses. If you have debt (like a mortgage or co-signed loans), consider coverage that would pay it off, in addition to any funeral expenses. And if you have children, think about how much support they may need and for how long.

Term Life Insurance Plans Vs. Other Types Of Life Insurance

Term life insurance can be an affordable life insurance option. So if monthly cost is a concern, a term policy is a great place to start looking. It’s important to compare the different life insurance policies. Here are some other options to think about:

Whole Life Insurance

Whole life insurance, also called a whole life policy, is a type of permanent life insurance. This means that the policyholder has the policy for their entire life. Moreover, a whole life policy is a “cash value policy,” meaning that policyholders can withdraw money they pay into their life insurance. 

The downside: monthly payments for whole life insurance can be a good deal more expensive than term life insurance. So, if you’re strapped for cash, or you think you can make more valuable investments elsewhere, term life might be the way to go. 

Universal Life Insurance

Universal life insurance is another type of cash value life insurance. When you pay into a universal life insurance policy, a portion of your premiums are deposited into investments. 

This type of policy is more flexible than whole life insurance – policyholders can change their premiums and death benefits. However, if your investments make money that you’d like to withdraw, you are liable to pay taxes, making this a less enticing option than other tax-free savings options. 

Ready to buy term life insurance?

Life happens. The best way to ensure your beneficiary (or beneficiaries) is taken care of is with a life insurance plan. The bottom line: term life insurance is worth considering if you’re looking for some peace of mind at a typically more affordable price tag.

With Bestow, you can buy an affordable term life insurance policy in minutes, without a medical exam, if approved. Our policies are backed by an A+ rated life insurance company, so you know you’re getting high-quality coverage, too. Find the best life insurance policy for you today!