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Using Term Life Insurance To Create Investment Opportunities

Dave Ramsey, Suze Orman and Clark Howard on Term Life Insurance

By Mike Heuer

While not all investment experts agree, many do recommend people who want life insurance protection to purchase term life instead of whole life in order to create greater investment opportunities.

Like many other financial advisors, for Dave Ramsey term life insurance is the best way to provide life insurance coverage instead of purchasing more expensive whole life insurance products. The difference in price for the same level of coverage makes term life much more affordable while enabling policyholders to invest the difference in higher yield products.

But, Dave Ramsey says about 70 percent of life insurance plans sold are the more expensive whole life insurance products offered by life insurers instead of the much more affordable term life insurance policies. That means, for Dave Ramsey, term life insurance is being overlooked by too many families.

For Suze Orman, term life insurance greatly is preferred over whole life insurance options. A big reason says Suze Orman: term life insurance is much more affordable and provides a death benefit for a fraction of the cost of whole life insurance products. And when term life rates are many times less than a 10th of what is charged for whole life insurance plans, there is a great deal of money available each month for the wise investor to build a retirement income.

“I hate whole life insurance,” says Orman on her popular website. “The only type I like for the purposes of insuring your life is term life insurance.”

When it comes to the notion of what is the purest type of life insurance, like other, for Suze Orman, term life insurance is it.

Many families and particularly young families make the mistake of not having term life insurance Clark Howard says, and that is a big mistake. An insurance expert and financial advisor, Howard suggests even struggling families should have some level of term life insurance to prevent drastic changes in their standards of living if the primary benefactor should die and family income levels suddenly plummet.

In particular need of term life insurance Clark Howard says, are stay-at-home moms or fathers, who provide the equivalent of about $121,000 worth of work and in-home services during the course of the year of those same tasks were hired out – such as laundry, child-rearing, running household errands and other tasks, according to a recent survey done by If that stay-at-home spouse were to die suddenly and those tasks suddenly had to be hired out, the impact on family finances would be significant.

While some adjustments always can be made, the financial burden still would be great on the surviving spouse, who likely would suffer a drop in work quality as well as taking on an additional financial burden once taken care of by the many tasks the stay-at-home spouse took care of on a daily, weekly and monthly basis.

In such instances and many others, it is best to buy level term life insurance, Clark Howard says. There are many reasons for buying a level term life plan, which provides a set death benefit for a predetermined number of years and then expires.

The best reason is the affordability when compared to whole life insurance. For a fraction of the cost of a whole life plan, a term life policy can be purchased and provide the protection many families need for up to 30 years with options to either renew or convert to whole life.

See articles related:

Clark Howard on level term life

Suze Orman Tips on Life Insurance

Dave Ramsey The Truth About Life Insurance