What does Suze Orman say about life insurance?
Suze Orman isn't a fan of whole life insurance, and especially not as an investment. Investment portfolios for whole life policies usually have expensive fees and are overly conservative. Keep your investments and insurance separate, and stick to term life insurance instead of whole life.
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.
Life insurance is no longer needed for many people once they reach their 60s or 70s. At this point they retire, their kids have grown up, and they've paid off their mortgage and other debts. However, others prefer to keep life insurance later in life to leave an inheritance and to pay off final expenses.
The Ramsey Way Recommendation
We always teach anyone shopping for term life insurance to buy 10–12 times their annual income before taxes. The reason for the multiplier is simple: If the worst happens, that size of payoff will give your family plenty of resources—and time—to regroup while they recover from your loss.
If you don't have dependents or your loved ones can cover end-of-life expenses with your existing savings or investments, a life insurance policy may not be necessary.
- Symetra – Best for Term Life Insurance.
- Transamerica – Great for Reliable Policy Illustrations.
- Lincoln Financial – Great for Estate Planning.
- MassMutual – Great for Financial Strength.
- Midland – Great for Seniors.
- Nationwide – Great for Young Adults.
Whether you've followed Dave Ramsey for a day or a decade, you know he hates cash value life insurance and never recommends it. Dave will always tell you to get term life insurance over everything else out there on the life insurance market!
The Three-Year Rule
Under this IRS rule, the transfer must: (1) take place within three years before the original owner's death and (2) be made without any consideration. If both are the case, then the proceeds from the policy are counted in the decedent's estate for tax purposes.
The bottom line. Life insurance is a smart idea for most seniors. That's especially the case if you have a spouse, lack plans to cover end-of-life costs or don't have a long-term care insurance policy.
Congress set up this rule to prevent people from using life insurance cash value as a tax shelter instead of for insurance protection. Life insurance policies that receive too much in premium payments during the first seven years turn into a MEC.
What does Warren Buffett think of life insurance?
Warren Buffet showed his confidence in life insurance as an asset when he revealed in the 2004 Berkshire Hathaway Annual Report, “Berkshire purchases life insurance policies from individuals and corporations who would otherwise surrender them for cash.
Annuities offer better investment and income benefits while you're alive. Your return is higher because you aren't also paying for life insurance coverage. Instead, all the money is put toward an investment.
Wealthy individuals with a net worth over $1 million can use life insurance to provide for their loved ones in the event of their death, as an investment vehicle, or as protection against estate taxes.
Too expensive for old people
Hence, as you age and if you develop a medical condition, then the insurance company will charge more premium since it will consider you to be a more-risk individual. With age, the premium amount can rise exponentially, making it too expensive for people over 60/70.
- Three ways to lower your life insurance premiums.
- Low-cost quotes are only for people who qualify for a “Preferred Plus” rating.
- Life insurance companies pay higher commissions to agents to sell their products.
- Life insurance companies don't like to give payouts.
Life insurance isn't the smartest investment for most people. Cash value life insurance is more expensive than term life insurance and typically provides less return on your investment than a standalone investment account.
Northwestern Mutual Life Insurance
As the largest life insurer by market share in the U.S., Northwestern Mutual is an established choice with a proven record. And, it offers a number of types of policies across the country.
State Farm is the largest auto insurance company in the U.S., with 17% of the market. Other big car insurance companies include Progressive, Geico and Allstate.
| Company | Best for | AM Best Financial Strength Rating |
|---|---|---|
| Nationwide | Customer satisfaction | A+ (Superior) |
| Northwestern Mutual | Universal life insurance | A++ (Superior) |
| Prudential | Policy personalization | A+ (Superior) |
| State Farm | Term life insurance | A++ (Superior) |
Guaranteed Issue Whole Life Insurance is a product specially designed with Seniors in mind. If you are between the ages of 50-80, you are guaranteed to be accepted for a policy and cannot be turned down for health or medical reasons.
Is term life or whole life better?
The pros and cons of term and whole life insurance are clear: Term life insurance is simpler and more affordable but has an expiration date and doesn't include a cash value feature. Whole life insurance is more expensive and complex, but it provides lifelong coverage and builds cash value over time.
Life insurance is a popular way for the wealthy to maximize their after-tax estate and have more money to pass on to heirs. A life insurance policy can be used as an investment tool or simply provide added financial reassurance.
What does a 20-year term life insurance policy mean? This is life insurance with a policy term of 20 years. If the policyholder dies during that time, the life insurance company pays a death benefit to his or her beneficiaries, often dependents or family. After 20 years, there is no more coverage, and no benefit paid.
What happens after 10 years? At the end of the 10-year life insurance term, the period for fixed premiums expires. Assuming you've outlived the policy, no death benefit will be paid to your beneficiaries. And you won't be refunded any of the premiums paid.
If your term life policy expires while you're still alive, your insurance company will notify you that your coverage has ended, and you no longer need to pay your premium. If you still need coverage, it may be possible to renew your policy for a set period of time.
