5 Term Life Insurance Mistakes to Avoid
Whether you’ve followed Dave Ramsey for a day or a decade, you know he hates cash value life insurance and never recommends it. Dave and the entire Ramsey team will always tell you to get term life insurance over everything else out there on the life insurance market!
But even when you’re shopping for the right kind of life insurance, there are still some mistakes to avoid when it comes to buying term life insurance:
Check out prices specific to your situation!
Mistake 1: Not Buying Enough Coverage to Replace Your Income
- Always get 10–12 times your income in life insurance coverage.
- Free workplace policies are great—but they aren’t enough on their own.
- Your family needs enough to live on and room to grieve if you die.
- They can put the payout into good growth stock mutual funds.
- Investing the payout could replace your income for years to come.
- Both spouses need coverage, even stay-at-home parents.
Use this simple calculator to see how much life insurance you need without burning brain calories.
Mistake 2: Waiting Too Long to Get Coverage
- It leaves your family vulnerable if something unexpected happens to you.
- Life insurance premiums generally go up as you get older.
- Increasing risk of health issues could make you ineligible to buy a policy.
Mistake 3: Buying Too Short of a Term
- Quick tip: Term means how long the policy will last.
- We’re all about saving money, but not by short-changing on term length.
- Base the term on when your kids will be out on their own.
- You only need a policy while people depend on your income.
- We recommend a 15- or 20-year policy for most folks.
Wondering how much a term life insurance policy of that size would cost you each month? Get an instant estimate below!
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Mistake 4: Buying Too Many Riders
- The bottom line is, the cost of riders far outweighs the benefits.
- Common riders to avoid include income replacement, waiver of premium, critical illness, and accidental death.
- One possible exception is a child rider—this adds temporary life insurance coverage for your kids.
- It is a good idea if you’re still building an emergency fund.
- It allows you to cover funeral costs if the unthinkable happens.
- But drop it once you save 3–6 months of living expenses.
Mistake 5: Forgetting to Review Your Life Insurance Policy
- Life events that might change your coverage needs: new child, new home, got a raise, quit smoking, or had other health improvements (just to name a few).
- Review your policy regularly to make sure it still fits your current life situation.
Next Steps Toward Getting Life Insurance
Life insurance is a major part of a healthy financial plan for your family. And having the right type makes all the difference. Here are some practical steps you can take right now to get yourself covered.
- Have more coverage questions? Check out our Ramsey term life resource page.
- If you’re ready to get covered now, reach out to RamseyTrusted provider Zander Insurance today! Zander has decades of experience in matching people with the right term life insurance plan. They’re the experts you can trust to find you the best term life quote.
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