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Suze Orman Life Insurance Advice is Wrong

Suze Orman is wrong about life insurance

Reviewed By: Rob Pinner

Rob Pinner Rob Pinner is the founder and CEO of Pinner Financial Services servicing all 50 states. Rob started his insurance career in 2002.

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Fact Check By: Holly Mitchell

Holly Mitchell’s background in life insurance insurance goes back to 1985 when she worked for her father who was a New York Life agent. Holly has a marketing degree from Auburn University and has had a life insurance license since 2008. In addition to advising life insurance for customers all around the country, Holly is our website fact checker.

As an insurance professional with over 25 years experience in the industry, I often have to chuckle and grin when I come across pages of advice from so-called financial advisors/TV personalities like Suze Orman.  Suze has a true dislike for whole life and IUL insurance.  We agree that whole life insurance and indexed universal life is not for everyone.  Most of our clients need a lot of life insurance at the cheapest price that they can  get it. We represent all of the best life insurance companies and you can get an instant quote here on our website.

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Reading between the lines or YouTube comments, it’s not long before you realize that she is selling a product, not a service. If you visit her website, the first tab next to the “home” tab on her site is “Books and Kits”, all of which can be had for a very special price. What is not found, however, is Suze Orman life insurance advice other than not to buy it.

Her books have very interesting titles such as:

Ms. Orman’s awards and accolades, bestowed by the media, are certainly impressive and much too numerous to mention, but I have noticed that she does not have any professional designations after her name. You know, the ones that show that you have completed the education requirements and passed the tests to be able to discuss and transact the sales of investment products. She is full of advice on money matters, but she does not have a CPA or CFP following her name. She frequently speaks about insurance products and how terrible they are for the consumer, but she doesn’t have a ChFC (Chartered Financial Consultant) or CLU (Chartered Life Underwriter) after her name either. Her audience believes her advice because, just like Dave Ramsey, she is on TV or the radio, not because she is a qualified to dispense it. For this reason, it makes good sense to analyze the advice she is giving. 

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Suze Orman is wrong about life insurance

“WL (whole life), UL (universal life) and VL (variable life) are on the top 10 list of investments that I hate. They literally do absolutely nothing for you, and they do everything for the financial salesperson.” — Suze Orman

I am a fairly knowledgeable insurance professional and I do know that absolutely no financial salesperson shares in the death benefit of any insurance policy unless it is his or her spouses or the children of that financial salesperson.

“Insurance needs to be insurance. Investments need to be investments. You should never combine the two ever, ever, ever!” — Suze Orman

Oh really? It is because an indexed universal life policy has a death benefit that the earnings from the market are not taxed as they would be with a mutual fund. It is because the regulatory arm of the financial and insurance industry has allowed this indexed product to be marketed as insurance, that the benefits of indexed universal life outweigh the benefits of competing investment products.

“First, the only reason you need life insurance is if anyone is dependent on your income. That can be kids, a spouse, a partner, an elderly parent. If no one is dependent on you, then you don’t need it.” – Suze Orman

That is an interesting statement. Because, according to the Life Insurance Marketing and Research Association (LIMRA), as of 2010, 70% of American families owned some type of life insurance and the total of in-force coverage as of 2010 was 18.4 trillion (that’s trillion) dollars. In 2010, direct purchases of permanent life insurance (whole life, universal life, variable life, and variable universal life) represented over 61% of life insurance policies issued. A large portion of that number is indexed universal life, which has become one of the most popular investment vehicles in the market today. So then, Ms. Orman, I guess all of these people are just not as financially astute as you are.

“Do not let anyone talk you into buying a life insurance policy on your child.” – Suze Orman

If I’m not mistaken, sometimes children die. Unless your audience has about $8,000 laying around, they are going to need life insurance (that costs about $10 month) to pay for their precious child’s funeral and since there is no such thing as Suze Orman life insurance, you’ll have to choose between term or permanent life insurance. Or better yet, the parent could start an IUL out while the child is very young and then fund it enough to pay for a complete college education.

“You should only look for one type of coverage: term life insurance. Do not—I repeat, do not—buy any other type of life insurance. There’s another kind, called “cash value,” which is a colossal waste of money if you ask me.” – Suze Orman

This is one of many Suze Orman life insurance quotes.

The reason Term Life insurance is so cheap is because only about 1% of all term policies result in a death claim. In fact, 72% of all term policies are either canceled or converted to permanent insurance in the first three years. This statistic leads me to believe that it only takes about three years before the term insurance policyholder realized they made a mistake and converted the policy to permanent insurance like indexed universal life.

Suze Orman is wrong about life insurance

Ms. Orman and Dave Ramsey work very hard to convince their followers to pay off their cars and their homes and then invest their money into mutual funds that are not as safe as IULs and have no life insurance attached to the investment product. The IUL, which is the life insurance they preach against, provides significant tax savings, guaranteed earnings, and a death benefit that does not become part of the estate and become taxable like mutual funds. In the end, Suze Orman life insurance recommendations are way off base for most hard-working families and we believe consumers should ignore all Suze Orman life insurance quotes.

When comparing investment products, it makes more sense to talk to a professional, not a TV personality. Call the professionals at Ogletree Financial Services at 1-800-712-8519 or complete the short form on the left of the page.

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Frequently asked Questions

What’s the difference between Suze Orman and Dave Ramsey?

Suze Orman is wrong about life insurance

In simple terms, Suze Orman sells books about becoming rich whereas Davve Ramsey sells books about being debt free. They do agree, however, that permanent life insurance should not be in your financial plan; only term.

Does Suze Orman have an insurance license or is she a CFP?

Life insurance at 64

She frequently speaks about insurance products and how terrible they are for the consumer, but she doesn’t have a ChFC (Chartered Financial Consultant) or CLU (Chartered Life Underwriter) after her name either. Her audience believes her advice because, just like Dave Ramsey, she is on TV or the radio

What does Orman mean when she says don’t combine insurance with investments?

It’s not a very logical viewpoint when you consider that 75% of Fortune 500 CEOs use Indexed Universal Life insurance as part of their retirement planning.

Why should I disregard Suze Orman’s advice about insurance?

Suze Orman is wrong about life insurance

Because the IUL, which is the life insurance she preaches against, provides significant tax savings, guaranteed earnings, and a death benefit that does not become part of the estate and become taxable like mutual funds.

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