Aug 4, 2026
Follow us on Google for more Moneywise news
Add us on GoogleWhen Chris called The Ramsey Show to share that he’d been pitched whole life insurance as a hedge against an economic collapse, he wasn’t sure about it.
Financial advisors referred by his sister had recommended switching from term life to whole life insurance. Their pitch: If the stock market collapsed at retirement, the cash value of a whole life policy would serve as a separate savings account to draw from instead of touching retirement funds.
Advertisement
He asked Ramsey whether there was something to the idea.
Thanks for subscribing!
The insurance clarity you've been missing.
By signing up, you accept Moneywise Terms of Use, Subscription Agreement, and Privacy Policy.
“How do we prepare for the Great Depression that could be coming?” Ramsey asked Chris. “We don’t.”
Ramsey’s take on whole life insurnace
Ramsey dismantled the advisors’ advice on two fronts. One: on the premise that a life insurance company would stay solvent while the stock market collapsed. Ramsey wasn’t buying it.
“So their premise is that the life insurance company will be open and prospering, but the stock market will have disappeared,” he said. “That’s dumb.”
He added that, during the Great Depression, many life insurance companies closed like any other type of business.
“Every business will go down except them somehow?” he continued, sarcastically. “They’ll be the only ones standing? It’s fear-mongering to make their commission is what’s happening.”
On the tax claims the advisors made about whole life, Ramsey was equally direct, telling Chris: “They lied to you.”
Whole life is only effectively tax-exempt, he explained, when the policy underperforms — when you get out less than you put in.
Advertisement
“A lot of people don’t even get out of it what they put into it, and there’s no taxes,” he explained. “But if you get out more than you put in, you pay taxes on whole life.”
Must Read
- The ultra-rich use these 5 real estate strategies to build wealth while they sleep — you can start with just $100
- Here’s the average income of Americans by age in 2026. Are you keeping up or falling behind?
- Insurance companies profit most from drivers who auto-renew without shopping around. Comparing 100+ quotes takes 2 minutes and costs nothing
Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
Why Ramsey has no collapse plan — and isn’t planning one
Ramsey’s position on economic doomsday scenarios is categorical. He said he has no financial plan for an atomic bomb drop, no plan for a full American economic collapse and no product that would survive either event.
“I buy bullets and water if it collapses,” he said.
Even the FDIC — which insures deposits up to $250,000 per depositor per bank — could hypothetically collapse in a true systemic failure, he acknowledged. Social Security could, too.
“Contrary to what the socialist believes, the money has to come from somewhere,” he continued.
Cohost George Kamel offered a useful reframe: The worst stock market drop in the last 50 years was around negative 38% during the 2008 financial crisis, and the market was up roughly 23% the following year.
Advertisement
“If you can’t bet on the American economy, there’s not a lot of other bets,” Ramsey added.
That framing is supported by long-run data. According to Dimensional Fund Advisors’ analysis, the S&P 500 has compounded at around 10% per year since 1926, making long-term equity investing the most reliable wealth-building tool available to ordinary Americans.
The whole life commission problem
Ramsey’s sharpest critique was the sales incentive structure. Whole life insurance agents, he explained, earn roughly 20 times more in commissions than a term life agent does on a comparable sale.
“They make about 5% of what these whole life guys do selling you a $400,000 policy,” Ramsey explained. “The commissions on these things are just astronomical.”
That commission gap is well documented. According to Cover Forge USA’s analysis, a healthy 35-year-old can expect to pay five to 10 times more for a whole life policy than for equivalent term life coverage — with the internal rate of return on whole life cash value typically running just 2–4% after fees.
“Once I have established that you are a crook, a crook is a crook is a crook,” Ramsey said of financial advisors. “For anyone listening, if your financial adviser says, ‘Whole life is a great product,’ you need to run.”
You May Also Like
- JP Morgan sees gold hitting $6,000/oz before 2027 — and a Gold IRA lets you hold the physical metal while deferring the tax bill. Get your free guide from Priority Gold
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and the simple steps to fix it ASAP
- Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how
- Millionaires under 43 are reshaping investing — just 25% of their portfolios are in stocks. Here’s where their money is going
With a writing and editing career spanning over 15 years, Emma creates and refines content across a broad spectrum of industries, including personal finance, lifestyle, travel, health & wellness, real estate, beauty & fitness and B2B/SaaS/tech.
