Suze Orman Talks Term Life Vs Whole Life Insurance

Do you love the Suze Orman Show? You might have an idea of Suze's stance on Term Life Vs Whole Life Insurance.. Below is Suze's conversation with a guest caller which will give you more insight on her thoughts about Whole Life Insurance.

Deepak: Hi Suze! We love your show. My wife and I watch it every week. It's such an honor to talk to you.

Suze Orman: Oh. Thank you! What can I do for you?

Deepak: Well Suze, a friend has recommended that we buy a whole life insurance policy as an investment.

Suze Orman: Stop! Stop! There isn't a friend in the world. Not one friend in the world that if it is a true friend that would recommend you buy a whole life insurance policy. A snook, somebody who wants to take you, somebody who in my opinion is not a friend maybe. But there is no way a friend would do it. Does that answer your question already?

Deepak: It gives me a good sense of what you are thinking.

Suze Orman: Alright, how old are you though Deepak?

Deepak: 31

Suze Orman: How much of an insurance policy? What was the death benefit?

Deepak: Um, I think 50...$500, 000.

Suze Orman: $500, 000? Alright how much was it per year?

Deepak: Fourteen

Suze Orman: Fourteen Hundred?

Deepak: $14, 000

Suze Orman: Fourteen Thousand dollars a year?!?!

Deepak: ...and the idea was largely use it as an investment to put money away to save on taxes.

Suze Orman: Ok, just out of curiousity...made my nose itch. I have to tell you whenever my nose starts to run I feel like Samantha...where I wanna...you know on Bewitched? I don't know if you were even born back then where I want to twinkle my little and get that guy out or whoever that friend is and off the face of this Earth.Listen, insurance is not an investment. Does this friend of yours happen to sell whole life insurance?

Deepak: Boy it seems like you're reading my mind here.

Suze Orman: Oh sweetheart that's not a friend that a sn....I don't even know %#*#)$! You know, it gives me dandruff I think. Listen, you can get a half a million dollar term policy for 20 years at your age for approximately $25 or $30 per month. OK? That's $300 per year. Now, if you really want to make an investment you could take all those other $1000s of dollars and take that money and invest it where? In a retirement account, a piece of real estate, in stocks, bonds, whatever it may be where it absolutely makes sense to you.

Do you know that I am a licensed insurance agent. A life insurance agent and I am licensed in every single state in the United States except Hawaii because I don't want to go to Hawaii right now to take the exam.

So I have been licensed everywhere. Very few people can tell you that they have that type of insurance background. I can tell you that if you
put $14, 000 into a whole life insurance policy, my friend, how much commission do you think I or your friend would make off of that $14, 000 deposit?

Deepak: Like atleast a thousand or two.

Suze Orman: Oh, are you sitting down?

Deepak: I am.

Suze Orman: Are you? What don't you try about $10, 000. Ok?

Deepak: Wow.

Suze Orman: So yeah, he could buy you...just forget it. Here's the bottom line. Don't do it. Do what I said. Buy a term insurance policy. You can get a half million dollars that way. $300 a year and tell your friend why doesn't he go and make some real enemies.

What is the reasoning behind Suze Orman's dislike of Whole Life Insurance (also known as Universal Life Insurance / Variable Life / Permanent Life)?

With Whole Life and the cost of the death benefit, it is way, way overpriced.

• $500, 000 worth of Whole Life Coverage = $14, 000 per year
• $500, 000 worth of Term Coverage = $300 per year

This a difference of $13, 700 that you pay extra just to get Whole Life Coverage.

Are there major differences between Term Insurance VS Whole life insurance?

Term Insurance is for a set term or time period from 1 year and usually up to 30 years.

Whole Life is life coverage for the rest of your life PLUS an "investment portion" held by the life ins company.

With Term Coverage there is no investment portion. Like car insurance it is pure insurance. That's it.

No other type of insurance tries to combine an investment with insurance other than whole life insurance. Is there really need for an investment to be combined with permanent life coverage?

Whole Life / Permanent Life / Universal Life / Variable Universal Life are all life ins where you have life insurance + investment and you are paying premiums for the rest of your life.

First of all we need to understand the reason for life insurance?

You need it to protect your family that depends on the breadwinner's income whether it be the husband working, the wife working or both parents working to bring money in to take care of the family. Life Coverage is there so that if something happens to the income provider the income can still come in and the family isn't financially devastated.

Once the children are grown up and making their own income they are no longer dependent on the parent(s) income. At that time you no longer need it for that purpose.

Does anyone want to continue to pay life insurance premiums for the rest of their life?

Some people believe that it will make their family rich but that is further from the truth. Your money is just being wasted. The right thing to do is to purchase term life coverage ONLY for the time period you need it for.

Besides, the older you get, the premiums are going to skyrocket. You only purchase it when you need to protect your family.

Put your money in savings or invest it wisely.

What is good about the investment portion when you buy whole life ins?

It is sold to you as an investment for retirement / children's college fund / emergency fund in which it will grow while being held by the company and you can "BORROW" from it and pay it back with interest.

I thought it was my money? Why do I have to borrow it?

It is not your money when you have an active policy. It stays with the insurer and you can only borrow it but you must pay it back. They call it CASH VALUE. Sounds like a catchy and wonderful phrase right?

The REAL RIPOFF? You first year of premium payments you get NO CASH VALUE. It is correct. The investment portion kicks in the second year of your policy. The money that you paid to the insurer the 1st year is awarded to the salesperson who sold you that policy. Is it really your money? Not really. Mainly the insurer's money once you hand it over.

BOTTOM LINE? Listen to Suze Orman and purchase Term Coverage when you have dependents / children because that's when you need it the most.

Skip the Whole Life Policy and put the difference in savings into your bank account or a retirement account. You control it 100%. Make sure you have FULL CONTROL of your money to invest or save it anywhere you like. Keep a good distance between you and Variable Universal / Permanent / Whole Life / Universal Life Insurance or any life insurance that has you placing money into an investment as part of your policy.

Take your savings a step further by comparing Term Rates online.

Evan Povich is a representative of BaseQuotes.com Insurance Quote Comparisons Site. BaseQuotes.com offers cheap insurance quotes from over 100 of the top insurance companies offering life insurance quote / Term Life Rates, car insurance quotes, health insurance quotes, homeowners insurance quotes and Long term care insurance (LTC Quotes).

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