This is the Ramsey Call of the Day, part of the Ramsey Network. Ruben is with us, and green by Wisconsin. Hi, Ruben, welcome to the Ramsey Show. Hi, Mr.
Ramsey, how are you doing today? Better than I deserve, sir. How can I help? Fantastic.
So, first my question, and I'll fill in a couple of blanks. I am getting ready to go into a new field. It's life insurance, and you already take my state exam. I've been studying for the last month.
And this is finally it's life insurance, and I recently heard on one of your shows you kind of spoken against whole life insurance. This is really a brand new landscape for me, so I really don't have a lot of frame of reference. I just want to make sure I'm getting into something that's noteworthy and going to be something I can stand behind. The insurance company I'm getting into is called Lincoln Heritage.
So, that's kind of what's going on currently. Just a little background on the personal. I'm 44, just turned 44. I am just over two years clean from a 20-year heroin addiction.
Definitely a late bloomer here. I'm finally deaf. I was revived by an appointment. And thank you, Lord.
Second chance in life, I really feel I just want to, you know, I'm trying to, it's more than just about money to me. It's about, I just have so much to be thankful for, so much writing on all of this. I had a great church I've been plugged into, and they passed into baby steps. Actually, I lost my job right before Christmas.
What were you doing? And I was actually selling for a budget line. So, you're a people person. I love it.
Yeah, going into people's house and connecting with them. Sometimes I really felt like the secondary reason I was there is to help them with window treatments or whatever. But, yeah, it was definitely fulfilling. You're a hero, ribbon man.
I'm proud of you. Way to go. So, let's do a couple of things. This is a decision you have to make.
You don't make it because I said to. You've got to gather facts. You're calling me and saying, it bothered you that I tell people not to buy whole life and you're signed up to become a salesman for it. So, that's throwing you off.
Well, I guess it's industrial life, right? And it's final expense insurance. So, I don't know if it's wanting to say you might have no idea. I do have an idea in that I'm studying.
I understand the whole life is different than industrial and so forth. Does the insurance that you're selling have a cash value? It does. Okay.
Then it's a type of whole life or cash value product. There are various types. I mean, there's universal life. There's variable life.
There's whole life. There's industrial. I mean, but anything that has a cash value in it is where I'm going to have a problem. Okay.
Okay. And I'm not going to end this call. I think you're an amazing man. And I'm not going to end this call trash your dreams of what you're going for for your career.
But I'm going to give you a whole bunch of stuff to work on and decide for yourself. Number one, I'm going to give you a copy of Ken Coleman's new book from Paycheck to Purpose, because that's the move you're trying to make. You're trying to get into something that has meaning and purpose because your life has a whole fresh start. You're seeing things with cleaner eyes than you have ever seen because of your journey.
And it's a wonderful place in your journey that you are. We want to assist you in that. And so that book is in case I talk you into quitting before you start. Okay.
Okay. So the product, the reason I don't like the product is this. The way it works mathematically is not a good deal for the person that buys it. And I'll explain it to you.
The whole life traditional cash value insurance is 20 times more expensive for the same amount of coverage of life insurance. And so let's say you were going to buy a $200,000 policy. If it was $100 a month for whole life, it would be $5 a month for term insurance. Okay.
Now, where does the other $95 go? Well, it goes to build up this cash value inside the policy. It's a savings account inside the policy. So that's not a bad problem except that the fees are ridiculous in the whole life world.
Now, I don't know the particular product you're selling, but the typical whole life policy, the first three years, your cash value build up is zero, which means they kept your $95 a month that you put in the savings account and go to zero upfront fees. Okay. The second thing is the rate at which the money accrues is somewhere around 1.2% according to Federal Trade Commission studies. The rate of return on your savings account sucks as a long-term investment.
And this is a long-term play. The third problem is this, when you die after paying $95 extra per month, $5 bought the insurance and you're paying $95 extra for savings, they pay the face value of the policy. In this case, $200,000. So if you've built up after you got through the three zero years and you got a horrible rate of return and you keep putting $95 in there and you've built up $20,000 in cash value and you die, they send your beneficiary, your spouse probably, $200,000.
What happens to your $20,000 savings account that sucked? They keep it. And so this is like going down to the bank and opening a savings account to the first three years. They keep your money.
After that, they give you a lousy rate of return and when you die, they keep your money. It's a horrible way to save money. And so consequently, the people that you're talking about going to work for hate me with a vengeance because I tell people not to buy what they sell every day and have for 30 years. The worst, the particular product that you're in or that company I'm not even familiar with, but I'll guarantee you, their face is going to turn inside out and explode when you just mention the name Dave Ramsey.
So don't mention it because it won't do any good. We don't want anybody to explode. We're not going to make friends like that. If you're going to quit, just quit.
Do it with class. You're going to try to change them. You're not going to change them. You're going to keep doing it.
They've been doing it for 100 years. So lastly, what I'll do so that you can review this material in detail is I'm going to sign you up for Ramsey Plus, which is the Financial Peace University class and every dollar app. In that class, there is an insurance lesson that goes into detail on the life insurance portion so you can learn in detail what we teach about life insurance and you can't dispute it because it's just math. It's a fact.
And so consequently, no financial planning people unless they're in the insurance business and call themselves financial planners, no one in the financial world pushes cash value life insurance anywhere unless they sell it. There's no independent financial people that push the stuff. They all say, buy the term insurance for $5 instead of the cash value for 100. Do your investing with your $95 difference anywhere else but inside of a cash value policy.
You're better off putting it in a fruit jar in the backyard. At least the family can find it and it's there when you die. They don't keep it. It's trying to be investing in insurance at the same time and it's terrible at both at the end of the day.
So if I'm selling this thing, I'm going to have a moral problem knowing how much I know. So he's ignorance was bliss until now. We've been just learned a little too much about whole life. I think he can find a better job out there if he loves sales, if he loves insurance.
That's a noble thing to sell, but not whole life. I would stay away. It's your buddies from college that want to make a big commission off you. Stay away.
Again, I tell you, never to buy it and I know I'm kind of bursting your bubble in the middle of you having this whole recovery journey and everything and I don't want to do that. I want to say you're a hero. I'm proud of you. You and I are going to be friends even if you decide to work there.
So I'm just you stay with it buddy. But hang on Kelly, I'll get you the book for Ken Coleman and we'll get you signed up for Ramsey Plus. I'm not charging you a thing for any of this. I'm not going to keep your money when you die.
Thanks for tuning in to the Ramsey Call of the Day to check out all of our podcast just search Ramsey Network on Apple Podcast, Spotify or wherever you listen.