Should I Keep My Cash Value Plan if I Wouldn’t Save Money by Switching to a Term Policy?

Dave Ramsey and his team strongly advise against cash value life insurance, even if switching to a term policy doesn’t seem to save money right away. The reality is that cash value policies are an expensive and inefficient way to get coverage, and they don’t provide the same financial benefits as term life combined with smart investing.

Instead of keeping a cash value policy, the Ramsey team recommends switching to a term life plan as soon as possible and using the money saved on premiums to pay off debt and build wealth. Many people hesitate to make the switch because they’ve had their cash value plan for years, but the longer you keep it, the more money you leave on the table that could be working for you elsewhere.

If you’re unsure about the impact of switching, you can request an “in-force ledger” from your insurance company. This will show how your policy is performing and help you see whether your cash value plan is actually keeping up with rising costs. In most cases, the cash value policy will become more expensive and less beneficial over time.

As you eliminate debt and grow your savings, your need for life insurance decreases. That’s why Ramsey Solutions teaches that term life insurance is the best choice—it provides affordable coverage while you work toward financial independence. Don’t hold on to a cash value policy just because it seems easier. Get a term life quote today and start putting your money to better use.