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Dave Ramsey: Don't leave an estate with life insurance

You don’t use life insurance to leave an estate. It’s a bad idea. You leave an estate by saving and investing.
Dave Ramsey, Deseret News Modified: July 14, 2014 at 5:47 pm •  Published: July 22, 2014
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Dear Dave,

My mom is 71 and debt-free. She’s investing $600 a month in a universal life insurance policy worth $250,000 because she wants to leave something behind when she dies. What could she invest this money in, other than the life insurance policy, in order to leave an estate?

— Steve

Dear Steve,

This is a good question. You don’t use life insurance to leave an estate. It’s a bad idea. You leave an estate by saving and investing. The only people who will tell you to use a life insurance policy to leave an estate are life insurance salesmen.

Unless she’s ill, I wouldn’t keep the policy. Instead, I’d do some long-term investing. It won’t take long to get to $250,000 with $7,200 a year. It’s the kind of thing that sounds like it’ll take forever, but you’ve got to remember you’ve got growth and interest in the equation. I wouldn’t put money into a life insurance policy at age 71 unless there’s someone being left behind who really needs the money — and it doesn’t sound like there is in this case.

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