A few years ago I wrote a post sharing my feelings about getting life insurance advice from Suze Orman, expressing at that time that she was “a true life insurance idiot”. I just finished watching a recent offering by her on you tube and while she has made some headway, she should still steer clear of life insurance advice. The only thing that has changed is that she is now a licensed life insurance idiot.
Everyone who has followed this blog knows my feelings about whole life and in this regard I think Ms Orman may finally have some of her banter down to where it is coherent. If someone is trying to sell you whole life it is either because they don’t know any better or because they know exactly how to extract the maximum amount of money from you and leave you feeling kind of vaguely warm and fuzzy.
But once that point is made, Suze goes idiot again. I got a kick out of her stating that she is licensed in all states but Hawaii, and would be there if she didn’t have to go there to take a test. Hawaii quit requiring non resident agents to take tests about 7 years ago. They have the same reciprocal agreement that all the other states have.
She starts giving life insurance advice without knowing anything more than the person’s age. She doesn’t ask about health, income, or what it is the person is trying to cover. She just spouts out that a person his age should be able to get $500,000 of 20 year term insurance for $300 a year. She assumes that the whole life agent had a good reason for recommending $500,000.
This is a 31 year old she is talking to. She doesn’t know because she doesn’t ask, if possibly a 30 year term might be more appropriate (expecting to have more children, etc). She doesn’t know because she doesn’t ask if he was approved at the best rate class when he bought the whole life policy (she is assuming based on age that he is in great health) and she doesn’t know because she doesn’t ask, just how much income he is trying to insure against the loss of. Does he make $25,000 or $150,000? Is he married? Does he have children?
Suze makes a pretty big deal about being a licensed insurance agent, about being licensed in 49 states. She says “very few people have that type of life insurance background”. The truth. She is licensed in her home state. She had to take a test, most certainly not a rocket science test, and pay the state fee to become licensed. In the other 48 states all she had to do was prove she was a licensed agent and pay the non resident license fee.
She doesn’t have a background in life insurance. She doesn’t even have a very good background in being licensed. She shouldn’t be giving advice.
Bottom line. She can say don’t buy whole life, buy term all day long and it doesn’t mean she understands anything other than the fact that whole life stinks. She doesn’t get the fact that there are different term lengths and legitimate permanent needs. She doesn’t get that there are permanent products that aren’t whole life or variable universal life. She thinks all permanent products are cash value products and they are all bad ideas. I don’t think she has worked her way out of the idiot column yet.