Suze Orman's Take On Whole Life Insurance

Financial advisor Suze Orman has been very vocal about her dislike of whole life insurance, especially as an investment vehicle. Orman believes that permanent life insurance policies like whole life or universal life are bad investments and advocates instead for term life insurance, which is much more affordable and provides larger death benefits. She advises that insurance and investments should be kept separate and that consumers should be wary of insurance agents and financial advisors who push whole life policies, as they often come with high fees and poor returns. While Orman acknowledges that there may be certain situations where whole life insurance is appropriate, she maintains that, for the majority of people, it is not a good idea.

Suze Orman's opinion on whole life insurance as an investment

Suze Orman is a well-known financial advisor and expert. She has strong opinions on whole life insurance as an investment, which she has shared through various media, including her podcast, blog, and interviews. Here is a summary of her views:

Suze Orman strongly advises against using whole life insurance as an investment vehicle. She believes that "life insurance is life insurance, and investments are investments," and the two should not be combined. Orman argues that whole life insurance policies are often sold as good investments by insurance professionals because they can provide tax-free income during retirement. However, she warns that the projected returns are often overstated and that consumers should focus on the guaranteed cash value and death benefit instead. She claims that the actual returns are usually much lower than what could be achieved through other investments.

Orman includes whole life insurance on her hate list of investment products, along with variable and universal life insurance. She believes that these permanent life insurance policies do little for the consumer and primarily benefit the salesperson through high commissions. Orman recommends term life insurance instead, which is much more affordable and provides coverage only when it is needed. She suggests that consumers stick to term life insurance and invest their savings in other assets that will provide better returns.

Orman's advice on whole life insurance has evolved over her career. She previously sold whole life insurance policies as a financial advisor and even praised them as "one of the greatest investments around." However, she has since changed her stance and now advises individuals to "buy term and invest the difference." Orman acknowledges that there may be certain complex financial situations where permanent life insurance could be beneficial, but for the majority of people, it is not a good idea.

In conclusion, Suze Orman's opinion on whole life insurance as an investment is clear and direct. She strongly discourages consumers from investing in whole life insurance, arguing that it is a poor investment choice with lower returns than other options. Instead, she recommends keeping insurance and investments separate and opting for term life insurance to protect loved ones.

Orman's view on permanent life insurance

Suze Orman, a financial advisor, has been very vocal about her views on permanent life insurance. She strongly recommends avoiding permanent life insurance, specifically whole life insurance, as an investment vehicle. Orman believes that life insurance is not meant to be an investment product but instead a safety net to protect your family in case of an untimely death. She suggests that people should keep their investments and insurance separate.

Orman's advice on permanent life insurance has been criticised by some insurance experts as being too simplistic. She has a "hate list" for investment products that do nothing for the buyer and only benefit the salesperson, and on this list are three types of permanent life insurance: variable, universal, and whole life insurance. Orman believes that these policies are sold as good investments because they can provide substantial tax-free income in retirement. However, she warns that the projected returns are often overstated, and it's important to look at the guaranteed cash value and death benefit instead. She argues that the fees associated with these policies are high, and the returns are usually well below what could be achieved with other investments.

Orman suggests that instead of permanent life insurance, most people should opt for term life insurance, which is much more affordable and provides a larger death benefit for a lower price. She recommends that individuals buy term life insurance and invest the difference, arguing that this approach will result in better financial outcomes. She also highlights that permanent life insurance is not necessary for most people because, at some point, no one will rely on their income anymore.

While Orman acknowledges that there may be rare instances where whole life insurance is appropriate, such as when an individual has maxed out their tax-deferred options or has a more complicated end-of-life strategy, she maintains that, for the vast majority of people, it is not a good idea. Orman's stance on permanent life insurance is based on her belief that insurance and investments should be kept separate, and that term life insurance is a more cost-effective and suitable option for the majority of individuals.

Orman's advice on term life insurance

Suze Orman is a strong advocate for term life insurance, believing that it is the only type of life insurance that people should consider buying. She has been very vocal about her dislike of whole life insurance, particularly when it is sold as an investment vehicle.

Orman emphasizes that life insurance is meant to protect your loved ones financially in the event of your death. She recommends a term life insurance policy that is 20 to 25 times an individual's annual income to ensure that their loved ones receive a substantial death benefit. This large policy amount can then be invested conservatively to generate most of the income needed by the dependents.

Orman also highlights the importance of protecting anyone dependent on your income. She suggests that if no one relies on your income, there is no need for life insurance. However, if you have family members or loved ones who depend on your financial support, term life insurance is an excellent way to ensure their financial security.

In summary, Orman's advice on term life insurance is clear and concise. She recommends term life insurance as a cost-effective way to protect your loved ones, with policies that are 20 to 25 times your annual income. By keeping insurance and investments separate, individuals can make better financial decisions and ensure their family's well-being.

Orman's past views on whole life insurance

Suze Orman is a well-known financial advisor who has given advice on whole life insurance over the years. While her views on the topic have evolved, she has consistently recommended term life insurance over whole life insurance for the majority of people.

In the past, Orman sold whole life insurance policies as a financial advisor and recommended them to her clients. She praised the product's low risk, high return, and favourable tax treatment. However, she has since changed her tune and now advises individuals to buy term life insurance instead of purchasing permanent life insurance products such as whole life.

However, Orman's perspective shifted when she began targeting a wider audience, many of whom were likely unsophisticated when it came to financial matters. She realised that the complexities of cash value life insurance might be difficult to explain to her new audience, and so her advice evolved to focus on term life insurance as a simpler and more affordable option for most people.

In recent years, Orman has strongly recommended against investing in whole life insurance. She believes that permanent life insurance products, such as whole life, are bad investments that do nothing for the policyholder and only benefit the salesperson. She has gone so far as to say that anyone who tries to sell you life insurance as an investment should be cut off immediately and never worked with again.

Orman's main argument against whole life insurance is that it is not a good investment vehicle. She claims that the projected returns are often overstated and that the fees are too high. She recommends keeping insurance and investments separate and advises people to stick to term life insurance, which is much more affordable and provides a larger death benefit for less money.

Orman's opinion on life insurance for complex financial situations

Suze Orman's views on life insurance have evolved over the course of her career in the financial industry. She has gone from selling whole life insurance policies as a financial advisor to advising individuals to buy term life insurance and invest the difference.

Orman believes that permanent life insurance products such as whole life or indexed universal life (IUL) are bad investments. She feels that one would be better off investing the money saved by buying cheaper term life insurance. She recommends term life insurance, which is much more affordable and can provide a larger death benefit for less money.

However, Orman's advice has been criticised by some insurance experts as too simplistic. They argue that there are benefits to buying whole life insurance, especially for individuals with more complex financial situations, such as real estate professionals and entrepreneurs. For example, if you have reached the limits of what you can contribute to a tax-deferred retirement plan, cash value life insurance can serve as a means of setting aside additional funds for retirement.

Orman acknowledges that there are certain circumstances where purchasing permanent life insurance is advantageous. For instance, if you are putting together a more complicated end-of-life strategy, permanent life insurance can be a good product. However, she maintains that for the vast majority of Americans, permanent life insurance is not a good idea.

Frequently asked questions