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Old 01-29-2009, 06:55 AM
 
127 posts, read 282,512 times
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Default Cash in whole life policy to pay off CC debt?

I have a whole life policy that was set up 25 years ago. It has a death benefit of $100K and currently has a cash value of around $18K. The dividends currently cover about 2/3 of the yearly premiums plus I am paying interest on a $3500 loan that was taken out over 12 years ago but never fully paid back. I currently have around $17K worth of CC debt that I am trying to pay down by paying around $1000-1200/month on. My question is, would it be prudent to cash in the policy to wipe out the debt and therefor put the current debt payments to better use towards retirement? We rarely use our cc anymore so racking up more debt is not really a concern. I just hate putting that much money towards cc debt every month when I could be investing it. Also, I have a decent amount of term overage so losing out on this coverage is not a huge concern (I'm 37). Any advice would be appreciated!
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Old 01-29-2009, 07:32 AM
 
2,151 posts, read 3,107,142 times
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Cash in the whole life and pay off the credit card debt. Then take what you were putting towards credit card payments and invest it in something no-load with low admin costs.
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Old 01-29-2009, 08:47 AM
 
4 posts, read 18,185 times
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I LITERALLY just did this myself - 100,000 whole life policy, cash value of 17k, yearly premiums almost covered. I paid off some high interest debt and put the rest in my savings which is paying 3.5% right now (a credit union). I wanted to have a larger EF just in case...

Some things to consider - there are tax consequences. I have to pay taxes on about $6300. I waited until January 1 of this year so that I could push that off to next year.

Also, be sure you have other life insurance totally in place before doing so. I ended up going with a 30-year term of $250,000 for $15/month through ING.

Good luck!
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