No, Suze Orman does not recommend whole life insurance for most people; she strongly advises against it. Instead, she advocates for buying term life insurance and investing the savings separately. Orman considers whole, universal, and variable (cash-value) policies to be expensive products that serve the salesperson, not the consumer.
With that in mind, in my opinion, the only type of life insurance that makes sense is term, which is good for a specific period of time. The premium is based on your age, gender, health, the death benefit desired, and the term.
Suze believes that permanent life insurance such as whole life or indexed universal life (IUL) are bad investments, much like other financial entertainers such as Dave Ramsey. In her opinion, she feels you would be better off investing the money you save by buying cheaper term life, than by investing in life insurance.
Con: Higher premiums
Due to the lifelong coverage and cash value component, whole life insurance comes with higher premiums. It may be a challenge to cover them if you're young or don't have a lot of extra cash at your disposal.
Whole life insurance isn't just for protection—it's a tool for building tax-free, multi-generational wealth. The wealthy use it to fund investments and pass down wealth using strategies like the Rockefeller family's “use, grow, and pass down” system.
Dave Ramsey advises getting term life insurance only, covering 10–12 times your annual income for a 15–20 year term, to replace lost income if you die, while investing the savings in mutual funds instead of expensive whole life policies that mix insurance with investing. He recommends policies for income-earners and stay-at-home parents, avoiding riders and focusing on simplicity to become self-insured over time.
There isn't any age cut-off that makes life insurance no longer worth it; it's all about your personal situation. That being said, it is often worth having life insurance after 65 if you have dependents who rely on you financially.
The average rate for $1,000,000 term life coverage varies by term, with a 20-year policy costing $99 per month for men and $84 for women. A 30-year plan costs an average of $173 per month for men and $146 per month for women.
A more complex product than term life insurance. Higher premiums than term life insurance. Could be costly if coverage lapses early.
Martin Lewis's Thoughts On Life Insurance. Generally, Martin recommends Life Insurance as a financial safety net for you and your family. It's a way to buy peace of mind, helping to relieve your loved ones' financial burden during an already difficult time.
The "life insurance 7 year rule," or 7-Pay Test, is an IRS test for permanent life insurance (like Whole or Universal Life) to prevent overfunding; if you pay more than the maximum premium needed to fully fund the policy in seven years, it becomes a Modified Endowment Contract (MEC). MECs lose some tax benefits, making withdrawals and loans taxable as income (earnings first) and potentially subject to penalties, though they still provide a tax-free death benefit. The test resets if you make significant changes (like increasing the death benefit) to the policy, starting a new seven-year period.
Dave Ramsey recommends Zander Insurance as his trusted partner for life insurance, emphasizing their commitment to principles, debt-free operations, and focus on affordable term life insurance over whole life policies, aligning with his strategy of protecting families without complex, expensive cash value plans.
However, it may not be worth buying life insurance if: You don't have any dependents. You don't have any debt. You don't want to leave anyone an inheritance.
The rule has you withdrawing 4% of your savings balance your first year of retirement and adjusting future withdrawals for inflation. It's a strategy that, if all goes well, should be conducive to having your savings last for 30 years.
While it may be hard to find low-risk investment options with high returns, here are some options you may consider:
The "float" generated by insurance premiums is considered a significant benefit by Buffett. This is money collected upfront that can be invested before claims are paid out. There's no indication that Buffett sees life insurance as a primary investment vehicle for individuals.
About 90% of millionaires build wealth through long-term investing, often focusing on real estate, starting their own businesses, and making consistent, disciplined financial choices like budgeting, saving, and continuous self-education, rather than flashy spending, with a strong belief in controlling their own financial destiny. They prioritize tangible assets and income streams, using strategies like leverage and tax benefits, and avoid excessive spending on depreciating assets like luxury cars.
Some people may prefer the set death benefit, level premiums, and the potential for growth of a whole life policy. However, for those who would prefer to have more flexibility and options when it comes to their permanent life insurance, then universal life might be the better choice.
Unlike term insurance, whole life policies don't expire. The policy will stay in effect until you pass or until it is cancelled. Over time, the premiums you pay into the policy start to generate cash value, which can be used under certain conditions.