Dave Ramsey's Guide to Term Life Insurance Amounts

Dave Ramsey's approach to term life insurance is centered around covering funeral expenses, paying off debt, and ensuring the family can maintain their standard of living.

He recommends a term life insurance policy that's at least 10 times the annual gross income of the breadwinner.

This amount is meant to cover funeral expenses, which can range from $7,000 to $10,000, as well as outstanding debts and living expenses.

According to Dave Ramsey, the goal is to have enough coverage to pay off all debts, including credit cards, car loans, and mortgages, so the family can start fresh without financial burdens.

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Dave Ramsey recommends term life insurance as the best option for most people. He suggests that you need life insurance to replace your income and avoid leaving debt behind for your family.

He recommends a policy amount of 10-12 times your annual income. This is a general rule of thumb that can help ensure your family is well taken care of in the event of your passing.

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Dave also suggests choosing a 15- to 20-year term, or up to 30 years for younger families. This can give you peace of mind knowing you have coverage for a long period of time.

You should consider your current earnings when determining how much term life insurance you need. However, if you have a solid reason to project significant income growth in the near future, you can base your coverage amount on those projected earnings.

It's essential to remember that the purpose of life insurance is to take care of your family, not to go nuts and buy too much coverage unnecessarily. You want to have enough to ensure they're well taken care of, but not so much that it's a burden on your finances.

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You need life insurance to protect your family's financial well-being. Understanding the cost of life insurance isn't always easy, but finding out how rates are set can help you pick the right plan. You can get term life insurance, which is explained in a nutshell by Dave Ramsey in Term Life Basics From Financial Peace University (FPU). Term life insurance is a simple and affordable option for many families.