Suze Orman has created 12 steps to wealth. Basically, 12 important financial tips that are essential for a healthy financial life. Her steps include getting out of debt, and savings for your children’s education. The 8th step is “insuring your well being”. In this step Suze says that if anyone is relying on you for income, you should get life insurance.
If you have ever watched an episode of The Suze Orman Show or read one of Suze Orman’s books, you would know that Suze absolutely detests whole and universal life insurance policies. Suze believes that when whole or universal life insurance is looked at as a savings tool instead of just an insurance policy, the money that is contributed to a whole or universal life insurance policy could be earning a better rate of investment return elsewhere.
Suze Orman is a big supporter of term life insurance policies, and she firmly believes that those types of policies are the best ones to have. She insists that term life insurance policies are cheaper than whole and/or universal life insurance policies and that they just make sound financial sense. Suze has also mentioned that many companies or insurance agents try to sell whole life or universal life insurance policies to people just so they can earn more commission money.
Suze recommends that you should get term life insurance and continues to add that most people should get a 20 year term policy. Suze Orman also says that the coverage you should get, should be 20 times your annual income. She gives an example that a 35 year old earning $40,000 per year, should get $800,000 worth of coverage. She also endorses select-quote as the place where you should shop for term insurance.
Suze Orman usually suggests that people who own whole or universal life insurance policies redeem the policies for their cash value and instead purchase good term life insurance policies.
I respect Suze Orman, and I think that she does give some really good advice to people. I also agree with her that term insurance is going to be what most people end up buying because term insurance is very affordable.
However there are a couple of points that I don’t agree with. First, I don’t think that 20 year term insurance is what everyone should be getting. For example a 35 year old might want to consider a 30 year term policy since he/she will likely work until at least age 65, and a 30 year term life policy will cover that 35 year old for his/her entire working life, as opposed to just 20 years. The cost difference is also very little between a 20 and 30 year term policy for a 35 year old.
On the other hand many 50 year old people that I work with choose to get a 10 or 15 year policy. Often they choose this because a 10 or 15 year policy can be significantly cheaper than a 20 year policy when you are at that age, and a 10 or 15 year policy can cover you until retirement. So what I don’t agree with Suze Orman is that a 20 year policy makes sense for everyone – I think it really depends on the person.
I also think that some people like the idea of getting a permanent policy. If you want to know that the premiums you are paying are going to guarantee that you leave something for your spouse and kids, than a Guaranteed Universal Life policy might make sense. Often times I recommend that my clients purchase some term insurance and some permanent insurance. This combination gives them the peace of mind that they will definitely leave something behind, and it also lowers their total cost by blending a combination of term and permanent coverage.
Lastly Suze Orman recommends Select Quote. While Select Quote does offer some of the top life insurance companies, there are a few reasons why I wouldn’t recommend them:
Hi, this is Liran Hirschkorn from ChooseTerm.com; and today I want to talk to
you about Suze Orman and life insurance.
First, I want to say that I respect Suze Orman a lot. I think she gives
people some really great advice. I watch her show myself. Where I don't
agree with here on a couple of things I'm going to point that out to you
today in this video.
What does Suze Orman say about life insurance? Suze Orman recommends that
generally most people should get a 20 year term life insurance policy at 20
times your annual income. What does that mean? That means if you're 30
years old and you make $50,000 a year you should get a million dollar 20
year term life insurance policy.
She also says if you are a 50 year old you should get a 20 year term
policy. She gives the blanket advice most people should get a 20 year term
policy at 20 times their annual income. Where I don't agree is that every
person's situation is different. You want to assess your age. If you are 50
or 60 you might be looking at a 10 or 15 year policy, especially because
it's going to be significantly cheaper than a longer term policy.
If you are 20 or 25 you might want to get a 30 year term policy or you
might even want to get permanent insurance. But, If you are looking at term
you are going to want get maybe a 30 year policy because you are going to
want that to last a long time especially because you are young and it's
very cheap compared to a 20 year policy. You may have very young kids or
you may be planning a family and you want to have a policy that could
protect them until they get out of college.
First, I don't I agree that everybody should have a 20 year term policy. I
also don't agree that everyone should have 20 times their annual income. I
think that results in either people having too much insurance or too little
For example, you want to assess things like, do you have children? Are you
protecting just a spouse or are you protecting a spouse and three kids?
That makes a difference. Do you want to have funds to pay off a mortgage,
to replace your income for five years or for 10 years for 20 years? Does
your spouse work and how much coverage will she need to maintain the same
lifestyle? Do you want to have funds set aside for your children's
education as well as part of a death benefit if something were to happen?
These are all things to consider when deciding the type of coverage that
you want. Obviously, also figuring out what you can afford and figuring out
what the right number is for you. At ChooseTerm.com we work with you
specifically to help you find the right number for you. I don't think
everybody should just get 20 times their annual income or a 20 year term, a
50 year old is very different than a 30 year old.
Suze Orman also recommends SelectQuote. While SelectQuote is a well-
established company, they only work with about 10 life insurance companies.
Now, if you are in great shape, have no health conditions you probably will
get a competitive quote from SelectQuote. However, SelectQuote doesn't work
with every life insurance company so, when it comes to having a specific
health condition what we do is we work with over 30 companies. We know to
match you up specifically with the companies that are going to offer you
the most favorable rates.
For example, if you have diabetes or if you've had any other specific
health condition we can match you up with the right company. At SelectQuote
less likely that's going to happen. We've worked with people that either
have been declined or have gotten much higher quotes after applying with
SelectQuote and then being able to save them money by matching them up with
a different company that's more suitable for them. We work with all the
companies that SelectQuote works with plus at least another 20 other
companies that we can match you up with.
SelectQuote is also a call center so, you are not going to have that
personal relationship that you would have if you worked with an independent
agency. When you call SelectQuote you work with a call center agent. That
person is likely never going to call you again. As far as customer service
goes you'd be working with a different department, you won't be working
with the same agent that sold you the policy and, it's less personal.
At ChooseTerm.com we are an independent life insurance agency. You work
with the founder of the company. When you have an issue before, during or
after the sale you get to work for the founder of the company. It's a much
more personalized touch and approach to working with our clients.
So we agree with Suze Orman on a number of things. Term insurance makes
sense for a lot of people. You can get great rates by shopping the market
and working with an agency that can shop the market for you. But, we don't
necessarily agree with her specific blanket recommendation of one size fits
all, that one thing works for everyone. We also recommend that you work
with an independent agency like ChooseTerm.