Why Suze Orman Recommends Lifetime Term Life Insurance
Life insurance is an essential purchase for most consumers. It helps protect and provide for loved ones they care about. But buying the right life insurance coverage can be complicated. This is because there are several types of policies available, including term coverage and whole life coverage.
These two broad categories of insurance have important differences, with each type offering its own advantages and disadvantages. For those struggling to decide between them, this advice from Suze Orman on why she thinks term life insurance coverage is a better option might be helpful.
The big benefits of term life insurance, according to Suze Orman
Suze Orman has identified a few key advantages of term life insurance policies over whole life policies. These benefits relate to both the specific protection offered by a term life insurance policy and the costs of coverage.
Here are the main advantages of a term policy:
Most people only need life insurance for a limited time
The main reason Orman recommends term life insurance for most people is that this type of policy provides all the protection they need.
Life insurance is intended to replace income or services provided by the policyholder. The goal is to ensure that surviving family members do not experience a significant decline in their quality of life. But most people don’t earn an income forever and don’t have people who depend on their salary or the work they do for life. Eventually people retire and stop earning an income. And the parents or children that the insured was able to take care of will eventually no longer need help.
Once no one needs the policyholder’s paycheck or the help the policyholder provided, there is no need for term life insurance. Orman thinks consumers can generally determine the duration of the death benefit, such as 10, 15 or 20 years. As a result, most people can simply purchase a term insurance policy that provides protection for that period.
Orman acknowledges, however, that there are exceptions. In situations where permanent insurance is needed — such as for children with special needs who will always need care — she thinks a whole life insurance policy may be necessary.
Term life insurance can be much more affordable
The other big reason Orman thinks term life is a better option is that it can be cheaper. As she makes clear, “premium costs will be so much higher with a permanent policy”, while term life insurance coverage is within reach of the vast majority of consumers.
Orman warns that many people are being steered toward a whole life policy because finances may be better for insurance agents who typically receive higher commissions for selling permanent insurance. But, while agents may prefer consumers to buy whole life coverage, consumers are better off with a cheaper term insurance policy that provides the protection they need at a much lower price.
The good news is that Orman goes on to explain that shopping for coverage has never been easier since quotes can be obtained online. Consumers buying life insurance can compare term life and whole life insurance policies online, weigh the pros and cons of each, and make an informed choice about whether to listen to the financial guru and opt for term life coverage.
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