The Money Coach
  • About
    • Meet Lynnette
    • Media Kit
  • Contact
  • Subscribe
  • QR Code
  • Books
  • Categories
  • Coaching
  • Hire Lynnette
  • Money Coach University™
  • The Money Coach Recommends™
No Result
View All Result
The Money Coach
  • About
    • Meet Lynnette
    • Media Kit
  • Contact
  • Subscribe
  • QR Code
No Result
View All Result
The Money Coach
No Result
View All Result

Should I Borrow From Life Insurance Policy to Pay Off Debt?

Lynnette Khalfani-Cox, The Money Coach by Lynnette Khalfani-Cox, The Money Coach
in Insurance
Reading Time: 2 mins read
life insurance
15
SHARES
256
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

Q: I was wondering if it is a smart idea to borrow from my life insurance (whole life policy) in order to pay off debt?

A: If it was just a matter of evaluating the wisdom of using your life insurance to pay off your charge card debt, I would be inclined to tell you that it would probably be a smart move.

However, there is a big wrinkle in the whole equation: namely, you stated that your job is ending soon.

Normally, I would have counseled you to seriously consider paying off the debt quickly while you can – especially since taking a loan from your whole life insurance policy should have no tax consequences to you.

However, the bigger issue is your looming unemployment status.

Use Insurance as a Cash Cushion in the Future

If you don’t find another job or a replacement contract, you will have to consider how you will pay all your normal monthly obligations – housing, food, utilities, transportation, and so forth. I assume you have little to no savings (or some of that likely would have paid the debt already).

Unfortunately, it is taking people longer than ever to find jobs. And with 10% unemployment, 1 out of 3 job-hunters has joined the ranks of the “long-term unemployed.” This means they have been out of work for at least six months.

So given the current economic environment, and the fact that your credit card debt is carrying an extremely low interest rate right now, I would suggest continuing to pay on that debt as aggressively as you can, but don’t yet tap the cash value of your whole life insurance policy.

Keep it untouched for now, as a standby cash cushion that you can access in the future if things get especially tight and you can’t easily replace your income.

Tags: Life Insurance
Previous Post

Will Accepting a Settlement Offer From a Credit Card Company Affect Your Credit Score?

Next Post

Where to Get Free Money For Closing Costs

Related Posts

Teen Driver Auto Insurance Rates

Adding a Teen Driver? Prepare for Car Insurance Sticker Shock

by Lynnette Khalfani-Cox, The Money Coach

We’d always heard that teen drivers cause car insurance costs to surge dramatically, but this was a doozy – right amid a time of raging inflation and higher prices for everything else too.

COVID-19: How to Get Your Auto Insurance Rate Reduced

by Lynnette Khalfani-Cox, The Money Coach

In this video Lynnette explains why you should expect a credit or rebate off of your auto insurance rate of up to 30% during the COVID-19 pandemic.

lynnette khalfani cox and earl cox

Why You May Need Travelers Insurance

by Lynnette Khalfani-Cox, The Money Coach

On a recent flight to Florida, where my family planned to set out on a 7-night Caribbean cruise, the airline we took lost my luggage. Well, “lost” isn’t technically the right word. They accidentally neglected to put my bag on my flight for some reason – even though we’d checked...

holidays

Holiday Hazards That Can Harm Your Health and Finances

by Lynnette Khalfani-Cox, The Money Coach

During the holiday season, most of us are focused on family celebrations, shopping or taking part in social gatherings. But a new report from insuranceQuotes.com highlights the numerous dangers lurking during the holidays – hazards that could damage your finances or physical health. For starters, some 23 million Americans have...

auto insurance

3 Ways To Get the Best Price on Auto Insurance

by Lynnette Khalfani-Cox, The Money Coach

If you’re driving an automobile, or are about to purchase a new or used vehicle, it’s smart to make sure you have the proper amount of auto insurance at the best price available. Unfortunately, many people are paying far too much for auto insurance, simply because they’ve not taken the...

5 Tips To Make Health Care Costs Affordable Amid ObamaCare

by Lynnette Khalfani-Cox, The Money Coach

For some people, good health insurance coverage can offset some, if not all, of their health care costs. But if you find that you can’t afford to pay your deductible – or if you don’t have any insurance coverage at all – you’ll need a plan to manage your health...

insurance

Here’s Why Having Insurance Is More Important Than You Think

by Lynnette Khalfani-Cox, The Money Coach

Among all the things on your financial checklist, of all the financial planning topics that you know you need to tackle, insurance is probably one of the least favored and least likely to get done. Let’s face it. Insurance just isn’t a very sexy, financial topic. Most people don’t want to think...

Load More

Popular Posts

  • Car repair

    What to Do If You Can’t Afford a Car Repair Bill

    1379 shares
    Share 552 Tweet 345
  • What to Do if Your Spouse Stole Money From You

    1170 shares
    Share 468 Tweet 293
  • What to Do If You Can’t Afford to Leave Your Spouse

    1107 shares
    Share 443 Tweet 277
  • Here’s Why I Pay My Kids For Good Grades (And Maybe You Should Too)

    1012 shares
    Share 404 Tweet 253
  • What Do All Those Strange Codes In My Credit Report Mean?

    816 shares
    Share 326 Tweet 204
  • Do This Now If Your Wages Were Not Reported

    747 shares
    Share 298 Tweet 187
  • How to Find Out if a Debt Collector is Licensed to Collect Your Debt

    727 shares
    Share 291 Tweet 182

All information on this blog is for educational purposes only. Lynnette Khalfani-Cox, The Money Coach, is not a certified financial planner, registered investment adviser, or attorney. If you need specialty financial, investment or legal advice, please consult the appropriate professional. Advertising Disclosure: This site may accept advertising, affiliate payments or other forms of compensation from companies mentioned in articles. This compensation may impact how and where products and companies appear on this site. AskTheMoneyCoach™ and Lynnette Khalfani-Cox, The Money Coach® are trademarks of TheMoneyCoach.net, LLC.

©2009-2023 TheMoneyCoach.net, LLC. All Rights Reserved.

RSS / Sitemap /Submit an Article / Privacy Policy / LynnetteKhalfaniCox.com

No Result
View All Result
  • Books
  • Categories
  • Contact Lynnette
  • Get Coaching
  • Hire Lynnette
  • Money Coach University™
  • The Money Coach Recommends™
  • Home
  • Subscribe to Newsletter
  • QR Code

©2009-2021 TheMoneyCoach.net, LLC. All Rights Reserved.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In

Add New Playlist