Dear Dave,

I have a question about self-banking with whole term life insurance. The way I understand it, you can accrue a cash balance, borrow against it, and then pay interest to yourself. Is this worth it, or should I stay away from it and continue using a bank?

— Kunal

Dear Kunal,

Actually, it’s a whole life policy, not a term policy. And it’s an absolute scam.

Basically, with whole life you pay about 20 times more for the same amount of insurance that you would with a term policy. The extra money goes into a savings account, and you earn next to nothing on it, even after you finally start to build it up. One of the ways they’re pitching it now is the self-banking concept, where you can use your own money. It’s nothing magical or anything, because with a regular checking account you use your own money.

My advice is to stay away from the company that’s offering it and anything else they have. It’s a really bad product, and it’s a scummy way to sell whole life insurance — which is an awful product to begin with. No one, except for folks in that business, believes in it or talks positively about it anymore.

Being able to borrow your own money? Really? Why on earth would anyone want to borrow their own money? It’s ridiculous!

—Dave

Should I tithe on my business?Dear Dave,

My wife and I are Christians, and we own a successful small business in our town. Should businesses tithe?

— Barker

Dear Barker,

This is a good question. Giving is never a bad idea unless you do it irresponsibly and to the point of putting your family in financial danger. To the best of my knowledge, the Bible only addresses the topic of tithing by individuals — not businesses.

Personally, I don’t give a tenth of my business gross or net until I receive my paycheck. When that happens — meaning it’s profit that I’m going to pay taxes on, or it’s salaried income out of my business — I tithe on the profits.

So, I can’t really tell you I’ve found Biblical instruction to give a tenth of your business. Hope this helps!

—Dave

Dave Ramsey is America’s trusted voice on money and business, and CEO of Ramsey Solutions. He has authored seven best-selling books. The Dave Ramsey Show is heard by more than 11 million listeners each week on more than 550 radio stations and digital outlets. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.

Dave Ramsey is America's trusted voice on money and business, and CEO of Ramsey Solutions. He has authored seven best-selling books. The Dave Ramsey Show is heard by more than 11 million listeners each week on more than 550 radio stations and digital outlets. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.

 

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