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 recommend term life insurance over cash value policies because term provides the coverage you need at a significantly lower cost—freeing up money to pay off debt and build wealth.
However, if switching to term doesn’t result in meaningful savings, it may be due to factors like your age, health, or rate class. In that case, the key question is whether you still need the life insurance. If you do—and you’re unable to qualify for affordable term coverage—then keeping your current cash value policy may be the best option for now.
That said, it’s important to remember that as you reduce debt and increase your savings, your need for life insurance naturally goes down. Even if you keep your cash value policy today, you may be able to decrease the coverage amount over time, reducing your premium and freeing up dollars for other financial goals. Eventually, the goal is to become self-insured and no longer need life insurance at all.
