Tess
“Dear Steve,
Is it wise to take cash value out of whole life policy to pay off credit card debt?
Tess”
Dear Tess,
Now there is a tip that I often forget about. I just run into few people that have significant cash value in life insurance these days.
The answer to your question is that it could be an excellent idea to do that if you have the cash value in your whole life insurance policy.
The only downside I can see is that current cash value may be used to pay future premiums and if you take a significant amount of cash value out may just trigger you making future premium payments. Just check with your insurance company to see how the withdrawal of cash from your life insurance policy may impact you.
The beauty of the cash value life insurance loan is that once borrowed the money does not have to be repaid and only reduces the cash value of the policy when it is paid out. Additionally, you do not have to pay tax on the money you take out of your whole life policy in cash.
Thanks for reminding me about this valuable subject.
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