Should You Invest in Life Insurance? Here’s What Suze Orman Thinks

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Anyone considering life insurance should read these tips by Suze Orman.

Key points

  • Life insurance provides important financial protection.
  • Some policies also have an income component.
  • Suze Orman is not a fan of life insurance that doubles as an investment.

Buying life insurance to protect loved ones is a smart financial decision. Without a plan in place, surviving family members may face financial hardship after an unexpected death.

But buying life insurance to provide a death benefit is a good idea, choosing life insurance as an insurance policy money maybe not. Financial expert Suze Orman addressed the issue on a podcast in response to emails she received from people who were “persuaded to invest in life insurance.”

That’s why Orman thinks investing in retirement life insurance is a bad investment and not something most people should consider.

Suze Orman strongly recommends avoiding life insurance as an investment

When it comes to the question of whether people should invest in life insurance, Orman is clear in his opinion.

“Life insurance is life insurance, money is money, and it should never be combined,” he said of him. Women and Money podcast. “There is no place in your financial life to buy an insurance policy, where you invest in the plan to get tax-free income later in life, to grow, and return your savings.”

Orman is talking about a whole life insurance policy that, as he explained, several people have emailed him indicating that they have purchased it. Orman said many insurance professionals market the plan as a good investment because they say it can provide more tax-free income in retirement.

However, he cautioned that the expected value is often overestimated and it is important to look at the actual value of the income and death benefit, not the estimated value. He explained that when you consider the scale of the process, the numbers are not very impressive and many buyers find that the returns they get are much lower than what they could get with other investments.

Because these policies often don’t pay as much as they say, Orman recommends just saying no to buying them. “Whole life insurance is not an investment you want to touch at any rate,” he said.

Should consumers listen to Orman on life insurance deals?

Orman has some good advice about checking the guaranteed cash value and making sure you understand everything about buying a whole life policy.

The truth is, it is often possible for people to make more money with other businesses besides life insurance. And most people don’t need the help of whole life insurance because at some point there will be no one to rely on for their money.

A better option is often to purchase term life insurance, which provides short-term coverage when needed. Term life can be very affordable, can offer a large death benefit with a low premium, and has no investment component so buyers can use their savings on premiums and buy things that will pay off in the long run. .

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