Choosing a good life insurance provider and policy can be very overwhelming, and it makes sense to seek expert advice before choosing a policy. Suze Orman is an expert financial advisor and media personality that is well-respected for her podcasts and New York Times best-selling books on finance. She’s also a popular guest on Larry King and Oprah Winfrey’s television shows, providing financial advice for everyday Americans. Here’s what Suze Orman recommends for life insurance.
Stick to Term Life Insurance
Suze Orman recommends that you stick to term life insurance to cover your needs. Term life insurance lasts only for a specific period of time, usually 10 to 35 years, while whole or universal life insurance covers you for your entire life. Term life insurance is much more affordable and provides more flexibility than whole or universal life insurance. It’s a realistic option for the average American, regardless of your work or family situation.
Whole and universal life insurance is also often marketed as a way for people to invest and save money. Suze Orman recommends against this for a variety of reasons. The biggest reason is that the fees on these policies are very high, whereas if you invested in a traditional 401k or IRA account, your fees would be much lower. Many of these insurance policies can also be somewhat limiting in the investment options that they offer, and in many cases, will offer lower returns in the long run than 401k or IRA accounts. It’s also much more difficult for you to access the money you have saved without incurring penalties if you have it invested in a life insurance policy. This principle is known as buying term and investing the difference.
Putting your money into a strong and reliable term life insurance policy is what Suze Orman recommends to cover you and your family. You should always keep in mind that life insurance agents work for commission. This makes them motivated to sell more expensive policies because they know they will get paid more for them than an affordable policy. Don’t be swayed by the add-ons that life insurance agents try to push – in many cases, they aren’t necessary.
Suze Orman’s Life Insurance Tips
Suze Orman frequently posts about life insurance and other financial challenges on her blog. She’s known for making challenging financial situations feel clear and concise. Here are some additional tips and insights that she has shared regarding choosing a life insurance policy.
Make sure your premiums are guaranteed to stay level throughout the entire term of the policy. This is almost always the case for term life insurance, but may not always be true for whole or universal life insurance. It’s never pleasant when your bills fluctuate from month to month, and you can avoid this by checking ahead of time to make sure your premiums won’t change.
Buy enough life insurance that you can support your family for a significant amount of time should you pass away. In this case, Orman recommends purchasing at least 20 times the amount of yearly income that your dependents would need. This way, they can choose to invest it and grow their own wealth, and you won’t have to worry about their financial security.
If you don’t have anyone that relies on you for financial support, chances are you don’t need life insurance. Instead, you can take the money you might have spent on a policy and spend it on investments that will generate better long term financial growth. You can also focus on saving for retirement and paying down any debts you might have.
Avoid relying on a life insurance policy provided by your employer. Although it may seem like a great perk, the amount that they offer is usually just not enough to cover the expenses that your dependents are going to encounter. Employers usually offer only one to two times your yearly salary, which isn’t enough for people who are supporting families or other dependents. You also will lose coverage if you switch jobs, and then you will have essentially lost the money that you put towards the policy.
Suze Orman wants to empower Americans to make the best financial decisions possible. She likes term life insurance because it makes the most sense for the average person, and it is generally very clear-cut and straightforward. It’s affordable and doesn’t come with the hidden fees or caveats that are often present with whole and universal life insurance. Insurance marketing can be very confusing and overwhelming, so it’s important to look at your insurance options clearly to find the best possible options.
How to Choose Term Life Insurance
Selecting an appropriate term life insurance plan for your needs can be quite difficult, particularly if you don’t know much about it. When shopping for term life insurance, you should always make sure to get quotes from several different insurance providers. Each insurer has its own unique discounts and premium calculations, so your costs may vary dramatically between insurers. Look not only at national insurers but at regional and local ones as well – often they will provide similar coverage for a more affordable price.
You should always ask about available discounts when shopping for life insurance. You may be able to get a discount for living a healthy lifestyle or even just for bundling your life insurance with your car insurance or home insurance. There are so many different factors that go into your premium calculations, but looking for small discounts here and there can really add up.
When determining the length of the term, you’ll need to consider how your financial responsibilities will change over time. For example, how long will you be supporting your family? Once your kids reach adulthood, you may not need that coverage anymore. Additionally, you should consider any outstanding debts that you have and when you might pay them off. This can help you choose the appropriate length. There are also many online calculators you can use to determine an appropriate amount of coverage.
I am 64 year old in great health, self employed divorced for over 30 years two grown children four grandchildren would it be worth me having term life insurance for security and to give something to my children?
The cost will probably make it not worthwhile. You can see if it makes sense for your budget, but perhaps if you put the same amount of money into a savings account you will not risk outliving the term, and leaving them nothing.
Can a term policy be renewed?
Yes, it can be renewed, but it is much more expensive. Usually, it is best to replace it with a new term policy or consider converting it to a whole life policy.
My sister’s husband was just diagnosed with a condition of the brain called cerebral amyloid angiopathy that they say may eventually manifest somewhat like dementia. He is 67 & still working a full-time job. They have no life insurance. My sister asked me to help her find a policy that will provide burial coverage & at least a small amount to help her with other expenses. I know there are companies that don’t require a medical exam but they do ask health questions. Do you know of any companies that will insure him under these conditions? My husband & I have our burials paid for through Neptune, which she is considering but would she be able to get a small policy for other expenses?
Yes there should be companies out there that will offer a final expense policy without a medical exam or health questionnaire. Just do a search for “gauaranteed issue final expense insurance” and you will find a list of companies. Bear in mind that guaranteed issue policies are considerably more expensive, even if they are for amounts such as $10,000. But there are companies that will offer a policy under those circumstances.