Dave Ramsey and Suze Orman are personal finance and money management experts who have very large followings. You will find plenty of information online if you search for articles on Dave Ramsey vs. Suze Orman. Is Ramsey’s 7 steps to financial freedom better than Orman’s 9-step approach? Diverse opinions abound.
Ramsey and Orman have fiercely loyal followers who will point out the better methods of their respective financial strategies. However, in many ways, they have similar messages: Get out of debt, create a budget, save and invest. Their financial philosophies and strategies differ somewhat, but overall, they are teaching the same principles.
In addition to sound money management, they are both strong advocates of protecting yourself and your loved ones from catastrophic financial loss due to death or disability. It shouldn’t be surprising that Ramsey and Orman are proponents of life, disability and long-term care insurance. In this article, we will examine the differences between Dave Ramsey and Suze Orman with respect to their life insurance advice.
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When it comes to their overriding message, examining the Dave Ramsey vs Suze Orman philosophies is like comparing two successful fitness gurus. Often times, people will swear by their fitness guru because it has changed their life. They were in poor physical shape and heard an inspiring, hope-filled, empowering message. After months or years of hard work, their bodies and lives were transformed. They didn’t give up, but stuck to the plan through hard work and commitment.
The important part of any financial plan or fitness plan is to have achievable goals and stick to the plan. In this regard, both Ramsey and Orman have been very successful teachers/motivators. Some folks take to Ramsey’s personality and strongly dislike Orman. Sometimes, it’s the other way around. Both financial gurus have strong, motivating personalities and provide excellent resources through their respective books, workbooks, broadcasts and podcasts.
Ramsey vs. Orman on Term and Whole Life Insurance
As we discuss in another article, Dave Ramsey is very much against whole life or any cash value life insurance. He is a big fan of term life insurance as is Suze Orman. However, Orman isn’t quite as rigid as Ramsey and points out that there are legitimate reasons for permanent life insurance. In response to one question about a special needs child, Orman says the following:
I recommend you speak with a trusted insurance agent-ask friends and family for recommendations–about the need for a Permanent life insurance policy.
We agree with that statement for the most part. It is important to find an experienced (minimum 10 years), independent agent. Definitely look for someone with a good reputation and solid (real) testimonials.
Neither Orman nor Ramsey seem to be very familiar with a relatively new permanent product (that has been on the market for the past 15 years or so) called guaranteed universal life – or Term to 100. We discuss this “term for life” product in our review here.
Determining the right amount of life insurance to buy: Dave Ramsey vs. Suze Orman
Dave Ramsey gives some basic advice on how much life insurance to buy. He recommends buying 10 to 12 times your annual income. That’s Ramsey’s rule of thumb and he doesn’t depart from it.
Orman has a rule of thumb also, but she says 20 times your annual income is an appropriate amount of coverage. In some places she further clarifies and says to buy 20 times your dependents annual income needs.
We think Orman’s advice is better because it is based on your dependents’ needs – which could be much more or less than your annual income. However, it is best to spend more time examining the various factors that could cause you to decrease or increase the face amount needed. Everyone has a different situation. A surviving spouse might work full time, part-time or not at all. It often depends on the age of your children and family members willing to support.
Some people want to ensure their children’s college education is paid for. There are many examples of how and why the desired face amount can vary. It isn’t always a matter of crunching numbers either. Oftentimes, parents want to err on the side of having more than enough coverage.
Determining How Long to Keep Life Insurance In Force: Dave Ramsey vs. Suze Orman
Both Ramsey and Orman recommend buying guaranteed level term insurance. Generally speaking, they advise people to buy 10, 15, 20, or 30 year term policies. Ramsey is more insistent on buying a longer term than you think you might need. He mentions 30-year term policies frequently. On the other hand, Orman’s standard advice is to buy a 10 or 20 year term policy. Sometimes, she will say 10 year, 20 years “or more”.
Aside from Ramsey’s admonition to consider 30-year term life more frequently than Orman, you won’t find too much disagreement here. Their advice regarding term length is rather similar.
Where to shop for term life: Dave Ramsey vs. Suze Orman
This is one area where we feel that both Ramsey and Orman make recommendations that can actually harm the financial health of their followers. Dave Ramsey only recommends one company when it comes to shopping for life insurance. We examine Ramsey’s exclusive relationship with Zander insurance in one our articles. We feel it does people a disservice to recommend only one agency that offers a very limited number of companies.
It’s important to work with an independent agency that represents at least 30 companies, not 10 to 12, like Zander Insurance.
Suze Orman has a similar approach. She steers her readers towards SelectQuote. Like Ramsey’s relationship with Zander, SelectQuote is one of Orman’s paid advertisers. SelectQuote only offers 12 companies, so again, we feel that you deserve a much wider selection.
How can this adversely affect you? Well, less competition usually results in higher premiums. Please check out an example that would save someone thousands of dollars. In the example (shown in this article), the savings would be huge because the lowest-cost carrier offered through our agency offers a significantly lower premium than the lowest-cost option through Zander’s carriers. The example would hold true for SelectQuote too.
You should be aware of one point of distinction. Suze Orman provides a list of other large agencies (similar to SelectQuote) on her website. So, at least she is giving her readers a choice. However, most readers would click on the SelectQuote link since it is hard to miss on her site. It takes more digging to find the list of other agencies.
Dave Ramsey vs. Suze Orman – Conclusion
We don’t want to end on a critical note since we appreciate the work of both Orman and Ramsey. We disagree with their advice regarding where to shop for life insurance, but overall, we think the positive impact both of these personal financial experts have had is tremendous.
You will be much better off if you follow their approaches to eliminating debt, saving and building wealth. Is one approach better than the other? It just depends on who you ask. Of course, you don’t have to decide between the two. Some folks glean as much as they can from books and materials available by both.
Like us, you may find areas where you disagree with both Ramsey and Orman. However, staying disciplined in following time-tested money management strategies will usually yield very positive results.
If you would like advice or customized quotes for life or disability insurance, please call us for a free consultation.