Ideally, we would all retire comfortably on white-sand beaches or near our favorite golf course. Of course, life doesn’t always work out that way. Bills get in the way, unexpected emergencies always come up, and there never seems to be enough time. If you have found yourself having difficulty paying off debt or keeping up with bills, you may feel the need for a way out.
What to do when you can’t pay your bills.
Being unable to pay your bills as a senior can feel humiliating. The key to digging your way out of the situation you’re in is to not let it get you down. Don’t be hard on yourself; just focus on pressing forward. At your age, you may feel like there’s nothing but dead ends. That’s not true. Life is still full of possibilities, including plenty of options that can get you out of debt and into prosperity. For example, if you have a life insurance policy, you might be able to free up the money needed to pay off your debts and have some cash leftover.
Can you pay off debt using a life insurance policy?
The answer is yes! While it’s possible to use a life insurance policy to pay off a debt, the smartest thing to do is start cutting costs while considering your options. Cut the cable, cut all of the unnecessary expenses that you can. If you play your cards right, you’ll have the cable back on in no time. All you need to do is find a way out of your current situation. One option may be to borrow money against your Permanent or Whole Life insurance policy, but there will be consequences as we will cover later on. You will also discover a better way to use a life insurance policy to pay bills and debt. This option is for those over 65 and called a life settlement.
How to use your life insurance policy to pay a debt.
For the most part, there are two ways to pay off debt using a life insurance policy. You can pay it off with a life settlement or borrow the money against your policy if there is enough cash value. These two options are very different from one another, and each has its own set of pros and cons.
Just because you can pay off the debt by borrowing against your life insurance policy doesn’t mean that you should. If you are determined to use your life insurance to pay a debt, your first instinct might be to borrow money against your policy. Remember, only Permanent and Whole Life policies qualify.
Forbes.com reports: “Life insurance policy loans are available on life insurance policies where there is sufficient cash value to borrow against. The available loan will be a percentage of the cash value. You must pay interest on the policy loan.
To initiate a policy loan, you’ll need to contact your life insurance company. Before taking out a policy loan, find out what will happen to the components of your policy after the loan. You can do this by requesting an in-force illustration that will reflect the policy loan based on your plans—whether you’ll borrow more money, repay the loan or maintain the loan. Be sure the in-force illustration also reflects whether you will be paying interest on the loan out-of-pocket or if you will be borrowing interest as well.”
After all, the process is simple enough; all you have to do is call your insurance company and tell them you want to borrow money against your life insurance policy. Of course, there will be forms to fill out, but you won’t have to undergo a credit check or any of the red tape you’d have to if you applied for a loan from a bank. That’s about it. Once you make your phone call and fill out the paperwork, you will receive the approved funds via check or direct deposit.
Borrowing money against your life insurance policy can help you access a significant portion of cash value, and it may not be your best option. Here’s why.
Why a life settlement is a better way to go.
Compared to borrowing money against a life insurance policy, it may be a smarter idea to sell your policy to a third-party buyer instead. This kind of transaction is called a life settlement. Thousands of seniors use the money they received from their life settlement to settle old debts, pay bills, or supplement their retirement.
So, what’s so bad about borrowing money against your life insurance policy? For one thing, when you borrow money against your life insurance policy, you have to continue to pay your premiums. If you don’t pay back the loan, the death benefit payout will be reduced by the amount of the loan and outstanding interest.
By selling your life insurance policy for a life settlement transaction instead, you receive a lump sum cash payout that is always more than the cash value but less than the death benefit and eliminate your premiums. You can use the proceeds to pay off debt, bestow money to your loved ones while you’re alive, or spend the money on yourself instead! Take a nice long fishing trip, go on vacation, buy a condo next to a golf course, or whatever you wish. You need a licensed buyer to sell your life insurance policy and one of the easiest and most efficient ways to get an offer for your life insurance policy is to partner with a dependable company like MRE Finance. You can also find out the potential value of your policy in minutes using the free life settlement calculator.
Make a smart move with MRE Finance.
As you have discovered, selling your life insurance policy could be a great way to get out of debt and supplement your retirement. Here at MRE Finance, we believe that your golden years should be some of the best years of your life. We help seniors get the cash they need to live more comfortably and enjoy financial freedom.
MRE Finance has a team of experts that can help you find a significant cash offer for your life insurance policy.
Want to find out what your policy could be worth? Try our Free Life Settlement Calculator and receive an estimated value of your policy in minutes. If you prefer to speak with one of our specialists, give us a call at 1-800-521-0770.