Suze Orman is against Whole Life insurance because she feels that people can do better by buying Term Life insurance and investing the rest. Technically, it is true that certain stocks or other investments will give a far better return on one's dollar. But when one considers the risk and taxation on those types of investments, plus the fact that a large amount of medical expenses or just lack of self control might deplete one's savings in the later years, buying Whole Life insurance can make sense for some people. No cookie cutter approach fits everyone.
Suzi Orman is one of many people who recommend buying term life insurance and investing the difference. If this is done properly and IF the investments do well, you can come out way ahead that way.
The problem is, many people buy term and spend the difference. Then at the end of their term they become uninsured and often have health problems and are very expensive to insure.
Suzi is a financial entertainer. You can pick up good things from the financial entertainers but also a lot of things that don't apply to you.
President, The Firm of Steven H. Kobrin, LUTCF, 6-05 Saddle River Rd #103, Fair Lawn, NJ 07410
Here is what Suze says about permanent insurance on her website:
I HATE WHOLE LIFE INSURANCE
I HATE UNIVERSAL LIFE INSURANCE
I HATE VARIABLE LIFE INSURANCE
THE ONLY TYPE I LIKE – FOR THE PURPOSES FOR INSURING YOUR LIFE – IS TERM INSURANCE!
If you are smart with the money you have today and you get rid of your mortgages, car loans and credit card debt and put money into retirement plans you don’t need insurance 30 years from now to protect your family when you die.
http://tinyurl.com/obe5gvp
Let’s think about this perspective for a second.
She basically believes that family protection is the sole reason why people buy life insurance. Once the kids are out of the house, and you don’t have any more debt, and you can afford to self-insure, you don’t need a policy.
This may be true for some people, but it is not true for many others.
Consider some of the “what if’s:”
What if your elder parents become dependent on you?
What if you need to secure a pension distribution?
What if you incur an estate tax obligation?
What if you want to leave a gift to your favorite charity?
What if you start a business when you retire – as many people do – and you need to indemnify a loan, or fund a partnership agreement?
These are all reasons for why people need life insurance after the family protection stage. They should be considered when people do their life insurance planning.
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The problem is, many people buy term and spend the difference. Then at the end of their term they become uninsured and often have health problems and are very expensive to insure.
Suzi is a financial entertainer. You can pick up good things from the financial entertainers but also a lot of things that don't apply to you.
I HATE WHOLE LIFE INSURANCE
I HATE UNIVERSAL LIFE INSURANCE
I HATE VARIABLE LIFE INSURANCE
THE ONLY TYPE I LIKE – FOR THE PURPOSES FOR INSURING YOUR LIFE – IS TERM INSURANCE!
If you are smart with the money you have today and you get rid of your mortgages, car loans and credit card debt and put money into retirement plans you don’t need insurance 30 years from now to protect your family when you die.
http://tinyurl.com/obe5gvp
Let’s think about this perspective for a second.
She basically believes that family protection is the sole reason why people buy life insurance. Once the kids are out of the house, and you don’t have any more debt, and you can afford to self-insure, you don’t need a policy.
This may be true for some people, but it is not true for many others.
Consider some of the “what if’s:”
What if your elder parents become dependent on you?
What if you need to secure a pension distribution?
What if you incur an estate tax obligation?
What if you want to leave a gift to your favorite charity?
What if you start a business when you retire – as many people do – and you need to indemnify a loan, or fund a partnership agreement?
These are all reasons for why people need life insurance after the family protection stage. They should be considered when people do their life insurance planning.