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15 Times It’s Okay To Ignore Suze Orman’s “Forever Never” Rules

Not all of Suze Orman’s financial rules apply to every situation — here’s when it makes sense to break them.

By Adam Palasciano

Edited by Lauren Wellbank

Updated Feb. 20, 2025

Suze Orman is one of the most well-known personal finance experts of our time, famous for her hardline money advice. She touts her five "Forever Never" rules that warn against actions she believes will harm your financial future.

While her guidance may have helped some people become debt-free and build wealth, financial decisions are rarely one-size-fits-all.

Here are 15 situations where her five "Forever Never" rules may not be as ironclad as she suggests.

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Borrowing from your 401(k) may help you in an emergency

Orman advises never to borrow from a 401(k) because of the risk of taxes, penalties, and lost investment growth.

However, there are situations where this could make sense. In some cases, accessing these funds could prevent even greater financial hardship.

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A medical emergency could outweigh the cost

Orman general advises against tapping your 401(k) in an emergency, because the 10% early withdrawal penalty plus taxes could apply. For example, if you make a $2,000 early withdrawal from your 401(k), expect a 10% penalty of $200 plus taxes.

If you’re facing an immediate medical crisis and have no other way to pay, withdrawing from a 401(k) might be the least harmful option.

The penalties and applicable taxes may be far less than the cost of delaying critical treatment. Additionally, some plans allow for hardship withdrawals, making it possible to access funds without penalties in certain dire situations.

Avoiding high-interest debt could save money

If you're facing 25% credit card interest, borrowing from a 401(k) at a lower interest rate — typically one to two percentage points above the current prime rate of 7.5% — could reduce your overall debt burden.

If you repay the loan quickly, the long-term impact on retirement savings may be minimal. This strategy may also prevent damage to your credit score, which might take years to rebuild after defaulting on high-interest debt.

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Buying life insurance

Orman insists that term life insurance is the only type worth buying. Her reasoning is that permanent policies like whole life, universal, or variable life insurance are a waste of money, citing that permanent life insurance policies carry high commissions for insurance agents.

But for some people, whole, universal, or variable life insurance could be beneficial. These policies can provide financial stability beyond simple death benefits.

High-networth individuals can use life insurance for estate planning

Similarly, whole life insurance offers tax advantages that help wealthy families transfer assets efficiently.

A policy’s death benefit can help heirs cover estate taxes without selling assets at an inopportune time. In addition, it can serve as a reliable tool to preserve generational wealth and maintain financial stability for beneficiaries.

People with lifelong dependents may benefit from life insurance

If you have a disabled child or spouse who will require financial support indefinitely, a permanent policy ensures coverage doesn’t expire when a term policy ends. It can also provide a cash value component that policyholders can access if financial needs arise before their passing.

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Co-signing a loan

Orman warns against co-signing a loan, arguing that if a bank won’t approve the borrower, neither should you. However, there are circumstances where it might be reasonable, including when a responsible co-signer can help someone establish credit without significant risk.

This may be especially true for parents and caregivers, who value their personal relationship more than the potential credit hit.

Helping a responsible family member build credit

A parent co-signing a small car loan for a young adult with no credit history could set them up for financial success.

If the borrower makes on-time payments, their credit score could improve, reducing the need for future co-signers. Over time, this may help them qualify for better interest rates and more favorable loan terms.

Assisting someone with a stable income but no credit history

Someone with a job but no credit history, such as a recent graduate, might struggle to get approved for a loan. Co-signing can help them secure a loan in the first place and build a financial foundation. As long as the borrower is financially responsible, this temporary assistance can help them establish long-term financial independence.

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Deferring or defaulting on student loans

Orman stresses that student loans should always be paid off quickly and warns against deferring payments.

But in some cases, deferment can be the best option. Strategic deferment may help provide breathing room without long-term financial harm.

Temporary deferment may provide needed financial relief

If you’re unemployed or facing financial hardship, deferment can help you avoid default while keeping your credit intact.

Subsidized Federal loans offer interest-free deferment options for up to three years. This allows borrowers to focus on getting back on their feet financially before resuming payments.

Investing in a 401(k) or high-return assets may take priority

If your student loan has a 3% interest rate, but your employer offers a 401(k) match equivalent to a 100% return on investment, prioritizing retirement savings over extra loan payments could be a smarter move.

Over time, compound growth in investments can far outpace the low-interest burden of student loan debt.

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Buying variable annuities

Orman warns that variable annuities are expensive and unnecessary for most investors, thanks to high insurance company fees. But for some, they can be useful. Annuities may provide benefits that other investment options do not.

Tax deferral can benefit high earners

A high-income individual maxing out other tax-advantaged accounts may use a variable annuity to defer taxes on investment gains, reducing their immediate tax burden. This strategy may allow for greater growth potential while postponing tax liabilities until retirement.

Guaranteed income can provide stability in retirement

Some annuities offer lifetime income guarantees, which can be valuable for retirees who want to ensure they won’t outlive their savings.

These guarantees may provide peace of mind, especially for those without traditional pensions or other sources of fixed income.

Bottom line

Suze Orman’s advice has helped many people get ahead financially, but strict rules don’t always fit every situation. A strategy that works for one person could be detrimental to another.

Understanding when to be flexible with financial rules is key to making smart money decisions. Are there any financial rules you’ve broken that actually worked in your favor?

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