Can Final Expense Insurance be Used to Pay Off Credit Card Debt?
Final expense insurance provides many benefits for those who are covered by this form of life insurance. When seeking final expense insurance coverage, people usually find that final expense coverage is easier to qualify for than standard life insurance because medical exams are not required. In addition, older consumers and those with health issues often qualify for some degree of coverage. Most importantly however, when individuals purchase coverage, they can put the worry of how their loved ones will pay for their funeral and burial expenses out of their minds. Benefactors of the insureds will be able to easily access the cash value of policies to cover their beloved family member's final wishes and last bills.
If you are looking for final expense insurance to provide for your loved ones in their time of grief, you might be surprised to find that you can purchase a policy that serves almost as an investment for you. When you select whole life final expense insurance instead of a term policy, you will have permanent coverage that will last until you are 100 or beyond as long as you pay your premiums on time. In addition, whole final expense insurance also builds cash value over time that you can borrow against should you ever find yourself in a situation of needing extra money for unexpected expenses, medical payments or even credit card debt. With whole life coverage, you get the protection you need to pay for your final wishes while building a value that you can use in time of financial need.
Borrowing Against Your Permanent Policy
When you select whole final expense insurance, over the years your premium payments add up in an accumulated cash value. Once you build up value over time, you can basically take a loan against your policy. For example, if you have a policy with a $10,000 benefit and have paid an amount into it that equals a $2,500 accumulated cash value, you can borrow up to $2,500 from your policy. This could come in handy if a financial hardship arises. However, you can also use your cash value to pay off bills, such as high interest credit cards.
Borrowing from your whole policy is as easy as contacting your provider and explaining your intentions. Though each company's rules and interest vary, you typically would not have to make payments on your loan on any set schedule. Though it is a good idea to repay the loan because the death benefit will be affected, you will still have coverage for your final expenses as long as you continue making your premium payments. The question you would need to consider is whether or not it would be a wise financial move for you to borrow from your policy to pay off credit card debt.
Considerations Before You Borrow
Because many providers might advise against taking a loan against a final expense insurance policy because the amount provided to a benefactor would be affected if not repaid, determining if borrowing is best for you takes careful considerations. If you have high interest credit cards, taking a loan against your policy could quite possibly ease your financial issues. In addition, you would be able to structure repayment of your policy loan on your terms, easing financial strain during times you are strapped for cash. When you borrow from your accumulated cash value to pay off your credit cards and eventually repay the loan, you will have made a wise financial decision that still allows money for your benefactor to pay for your final expenses.