What life insurance does Suze Orman recommend?
Suze Orman recommends term life insurance for pretty much everyone who needs to cover expenses for a set period of time: parents with young children who need support until they become independent adults, if you have a spouse or other loved ones who depend on your income, or if you have a mortgage that needs to be paid.
Key points. Consumers buying life insurance have a choice between term and whole life policies. Suze Orman recommends term life policies. Term life can be a cheaper and better option for many people.
- #1 Haven Life.
- #2 Bestow.
- #3 New York Life.
- #3 Northwestern Mutual.
- #5 Lincoln Financial.
- #5 John Hanco*ck.
- #7 AIG.
- #7 State Farm.
As Orman says on her blog, "To fully protect your loved ones and make sure they never have financial hardship, my advice is to consider a term life insurance policy that is at least 20 times (25 times is even better) the annual income that you need to be replaced." Yikes.
Figuring out how much life insurance you need is pretty easy: just use the life insurance rule of thumb and calculate 10 to 15 times your income. This is the best way to account for inflation and household expenses, and to ensure that your beneficiaries have enough money for the long term.
Term coverage only protects you for a limited number of years, while whole life provides lifelong protection—if you can keep up with the premium payments. Whole life premiums can cost five to 15 times more than term policies with the same death benefit, so they may not be an option for budget-conscious consumers.
In 2021, the average monthly cost of life insurance for $500,000 of 20-year term life insurance for a non-smoking male in good health is $28 at age 30; at age 40, it's $39; at age 50, $93. Women tend to live longer and enjoy lower insurance rates, so the cost is $22 at 30; $33 at age 40; and $71 at 50.
Cons of Whole Life Insurance
Whole life is much more costly than term life and usually more expensive than universal life insurance. Whole life is a long-term investment, and it can take years to build up your cash value.
Mrs Orman said on the podcast: "Insurance is insurance, investments are investments and do not mix the two ever, ever, ever."
If you retire and don't have issues paying bills or making ends meet you likely don't need life insurance. If you retire with debt or have children or a spouse that is dependent on you, keeping life insurance is a good idea. Life insurance can also be maintained during retirement to help pay for estate taxes.
How much does the average person spend on life insurance per month?
The average cost of life insurance is $26 a month. This is based on data provided by Quotacy for a 40-year-old buying a 20-year, $500,000 term life policy, which is the most common term length and amount sold. But life insurance rates can vary dramatically among applicants, insurers and policy types.
In many cases (although not all) you won't need to keep term life insurance in retirement. This insurance is temporary and will expire at some point. But if you have a permanent life insurance policy, it can continue to provide you with important benefits through your retirement.
Dave recommends term life insurance because it's affordable. You can get 10–12 times your income in your payout, and you can choose a length of term to cover those years of your life where your loved ones are dependent on that income.
Permanent life insurance policies are a better fit if you have significant financial obligations that are not time sensitive. For example, if you have enough assets that your family would have to pay estate taxes when you die, you could purchase permanent coverage to help cover the tax bill.
Generally, when term life insurance expires, the policy simply expires, and no action needs to be taken by the policyholder. A notice is sent by the insurance carrier that the policy is no longer in effect, the policyholder stops paying the premiums, and there is no longer any potential death benefit.
Most insurance companies say a reasonable amount for life insurance is six to ten times the amount of annual salary. If you multiply by ten, if your salary is $50,000 per year, you'd opt for $500,000 in coverage. Some recommend adding an additional $100,000 in coverage per child above the 10x amount.
You should also note that these policies are only available to AARP members (meaning you have to be at least 50 to qualify) and membership can cost between $12 to $16 per year, depending on your method of payment.
| AGE | $25,000 | $100,000 |
|---|---|---|
| 72 year old female | $73.32 | $85.75 |
| 73 year old female | $81.35 | $95.87 |
| 74 year old woman | $89.62 | $108.25 |
| 75 year old woman | $97.28 | $116.23 |
| Age | $100,000 | $500,000 |
|---|---|---|
| 50 | $3,200 | $14,600 |
| 55 | $3,797 | $17,235 |
| 60 | $4,580 | $20,645 |
| 65 | $5,536 | $24,795 |
The average annual rate of return on the cash value for whole life insurance is 1% to 3.5%, according to Quotacy. While whole life insurance offers fixed, guaranteed returns on your cash value, you may earn higher returns with other investments, such as stocks, bonds and real estate.
Can you cash out a whole life insurance policy before death?
Can You Cash Out A Life Insurance Policy? You can cash out a life insurance policy while you're still alive as long as you have a permanent policy that accumulates cash value, or a convertible term policy that can be turned into a policy that accumulates cash value.
Surrendering an insurance policy will return to you the cash value of the policy, less some fees, and will cancel the policy3. The amount you recoup from the policy is taxable. So yes, you may withdraw money from your whole life insurance policy, or cash it out altogether.
Instead, she insists that folks should wait until 70 to retire -- that is, unless their bank accounts are, essentially, as large as her own. "If you have $20 [million], $30 [million], $50 [million], or $100 million dollars, be like me. If you have that kind of money and you want to retire, fine," she said.
Orman strongly recommends taking a long-term perspective when investing for retirement. This means buying assets you'll be happy to hold for many years and not worrying about short-term losses. This is a sound approach because, as she points out, there are inevitably periods when stocks will lose value temporarily.
Suze currently hosts her own 1-hour show on HSN, bringing you financial tools so you can be more and have more.
A guaranteed issue life insurance policy is often the best option for seniors in poor health. This is a type of life insurance that does not require a medical exam or answer any health questions, and you can't be turned down in any case.
If an individual has accumulated enough wealth to take care of their family upon their passing, then life insurance may not be necessary. Couples that have built a life together should have life insurance in case one of them passes away so that the other can maintain the same quality of life.
| Overall Rating | Best For | |
|---|---|---|
| New York Life | 4.8 | Best Overall |
| Guardian | 4.7 | Best for Financial Stability |
| Nationwide | 4.7 | Best for Living Benefits |
| Pacific Life Insurance | 4.6 | Best for Fewest Complaints |
The best life insurance for seniors depends on their age, financial obligations, health status and other important factors. However, it's important to keep in mind that whole life is often extremely expensive for seniors to purchase. Because of this, term life is often a better option for people in this age group.
If you've listened to Dave Ramsey for more than five minutes, you've probably heard him say term life is the only life insurance policy you should get. We recommend you purchase a term life insurance policy worth 10–12 times your annual income. That way, your income will be replaced if something happens to you.
What type of life insurance is best for a 60 year old?
What type of life insurance is best for a 60-year-old? Term life insurance is the cheapest and best option for most life insurance buyers who need coverage for a specific financial challenge, such as covering a mortgage or providing for a loved one.
According to financial expert Suze Orman, it is ok to have a life insurance policy in place until you are 65, but, after that, you should be earning income from pensions and savings. That said, there are a few situations in which having life insurance in your 60s might make sense.
