Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
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!
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.
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!
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.