During an episode of “Ask KT and Suze Anything,” personal finance expert Suze Orman criticized a 72-year-old caller’s financial advisor for bad advice about switching insurance policies. Here’s what happened in the course of the podcast.
Orman is a celebrated creator and financial advisor known for her blunt but fair advice. During an episode of the “Ask KT and Suze Anything” podcast, which deals with all things money, Orman received a call from a 72-year-old woman named Judy, who has been retired for 2 years.
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Judy revealed that she’s doing OK financially and is paying her bills without difficulty. Only recently, she met together with her financial advisor. Judy told her financial advisor that she had paid up her MetLife policy, valued at $16,000, with a death advantage of $26,000. Judy explained that she told her financial advisor that she had no long-term insurance. In response, her financial advisor told her she could trade in her policy with some additional money to assist cover the fee of a long-term care policy. Judy told Orman she was confused about what to do because she had all the time thought the policy can be used for burial. Judy asked, “Is it higher to have long-term care? I’ve never heard about insurance policy conversion before to long-term care.” Judy desired to know if these policies were legitimate.
Orman answered Judy’s query, “They’re legit for an entire lot of cash, Judy,” and explained her thoughts on Judy’s situation. Orman identified that doing one in all these policy conversions is pricey. Orman asked Judy, “Did he (her financial advisor) inform you how much more money? Did he inform you how much extra monthly to maintain it going?” Orman added, “The older you get, the costlier a long-term care policy is because the common age of entry right into a nursing house is 84.” Because Judy wanted her current policy for use for burial, Orman identified that this meant that Judy would not manage to pay for saved elsewhere to pay for her burial if she modified the policy.
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One other potential problem that Judy may run into when converting her MetLife policy to a long-term care insurance policy is that she could risk losing the premiums she’s paid over time. Policy conversion can sometimes include hidden costs. Orman explained, “So normally, when you’re in your seventies, most individuals can’t even afford long-term care. And lots of of those policies today, and folks know this who’re listening to this, they’re getting serious increases on their long-term care policies.”
So, what should she do?
Orman told Judy that she mustn’t follow her financial advisor’s advice. Orman felt that Judy would most probably qualify for Medicaid if she went right into a nursing home because she probably did not have that much money, so she’d meet the qualifying criteria. Paying more money monthly on a policy you will not need is pointless. Orman criticized Judy’s financial advisor and told her, “Don’t do that, don’t do that. Don’t do that on any level. Perhaps in a unique situation.”
Orman also gave Judy some additional advice and told her that if the facts were different, she should visit the “Women & Money” app to talk with Phyllis Shelton before making any final decisions about her policies. In line with Orman, Shelton is an authority on long-term care insurance, and “Truthfully, I personally would never be buying a long-term care insurance policy unless I talked to Phyllis Shelton first.”
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This text Suze Orman Puts 72-Yr-Old Caller’s Financial Advisor On Blast — ‘Do Not Do This. Do Not Do This On Any Level’ originally appeared on Benzinga.com
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