daves says 2016 bKENTUCKY (3/11/18) — In this week's Dave Says, Dave Ramsey says layoff insurance isn't as good as self-insuring with an emergency fund.

Dear Dave,

Some of the people I work with have been buying into a new kind of supplemental insurance that protects against layoffs. It costs about $30 a month per person, and the full payout if you’re laid off is $9,000. It seems to me you would have to be paying in for a long time to see that kind of return, so I wanted to see how you feel about this kind of thing.

Steve

Dear Steve,

Anytime insurance is there for something you could cover yourself, it’s a good idea to stop and remember that every insurance company is still a business. They must cover all the costs of operation, plus make a profit. Believe me, that takes a lot of money. 

Statistically speaking, if lots of people cashed in on a policy like this, an insurance company would go out of business. We’re talking about only $30 a month to cover $9,000. That alone tells you not many people cash in. It’s gimmick insurance.

On average, you’re losing money when you buy insurance of any kind. Again, on average, over the scope of your lifetime, you’d be better off simply saving money and self-insuring against things like this.

The only things I recommend buying insurance for are things you can’t afford to cover personally. But you can afford to cover a layoff by saving an emergency fund of three to six months of expenses.

If I’m in your shoes, Steve, I’m not buying that stuff.

—Dave     
 
. . .
 
Dear Dave,

I just filed taxes, and it looks like I’ll get a pretty big refund this year. A friend of mine told me I should adjust my withholding, so I don’t get a refund. This seems pretty dumb to me. Why would I change my withholdings when I’m getting money back?

James

Dear James,

The only reason you’re getting a refund is because you had too much taken out of your paychecks in 2017.

Let’s say your refund is $3,500. Basically, you loaned the government $3,500 of your own money, interest-free.

A refund isn’t a gift or reward, James. It’s your own cash that you get back because you paid in too much during the previous year. In your case, that adds up to almost $300 a month.

Instead of loaning the government money that you worked hard to earn, wouldn’t it be a better idea to keep it in your own pocket?

—Dave

Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 13 million listeners each week on 585 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.

SurfKY News

Disclaimer: The content supplied by columnists and letters to the Editor on this site does not in any way, shape or form, implied or otherwise, necessarily express or suggest endorsement or support of any of such content, statement, or opinions therein. SurfKY News does not necessarily adhere to or endorse content provided by outside non-staff sources.

sitelogosm© Copyright 2008 - 2018 SurfKY News Group, Inc. All rights reserved.
This material may not be published, broadcast, or rewritten without permission.

Click here to subscribe to receive daily updates by email.

Most Read This Week

Dec 16, 2018 2696

Ohio County Downs Todd County Central on Neutral Floor

by Steve LeMaster
Dec 17, 2018 998

Fire Damages Mobile Home in St. Charles

by Ladonna Kay Lee
Dec 17, 2018 955

Henderson Traffic Stop leads to Drug Arrest

by Doreen Dennis, SurfKY News
Dec 17, 2018 916

UPDATE: Ohio Co. Missing Teenager Located

by Rita Dukes Smith, SurfKY News Director

Most Read This Month

Dec 07, 2018 13489

UPDATE: Corydon Man Charged with Attempted Murder

by Nick Risley
Nov 30, 2018 7181

Madisonville Woman Charged with Eluding Police, Biting City Officer

by Doreen Dennis, SurfKY News

Weather brought to you by

44°
°F | °C
Cloudy
Humidity: 64%
Tue
Partly Cloudy
27 | 50
-2 | 10
Wed
Mostly Cloudy
33 | 57
0 | 13
Thu
Scattered Showers
44 | 51
6 | 10
Fri
Rain
34 | 43
1 | 6

Market Report brought to you by

 

Market Report

Stories Trending Today

Wyatt R
Dec 17, 2018 831

Madisonville Fire Chief to Retire Dec. 31

by Doreen Dennis, SurfKY News
apollo eagles logo 2015
Dec 17, 2018 396

E-Gals Clip Hopkins County Central, 49-29

by Steve LeMaster
Muhlenberg County Lady Mustangs
Dec 17, 2018 362

Lady Mustangs Suffer First Loss to Hopkinsville

by Steve LeMaster