Description: You can borrow from a whole life insurance policy to facilitate your debt settlement program.
Nobody wants to be in debt since living with debts can cause a lot of problems. Too much debt is harmful for your financial stability. When your debts start getting out of your control, you should look at different techniques to eliminate debts. Many debtors resort to a debt settlement program, which is nowadays a popular debt relief solution. However, you should also keep in mind that you need to fund the debt settlement program. When you’re short in cash, how would you fund your debt settlement program? This is where a life insurance policy comes into play. You can take a loan from your life insurance policy to fund your settlement program and get your finances back on track.
Under a debt settlement program, you no longer make payments to your creditors until you accumulate 50% of your total outstanding balance. Rather than making payments to your creditors, you put your money into a trust account. The settlement company would bargain on your behalf with your creditors just to ensure that a significant part of your debt is lowered or eliminated. The success of debt settlement is dependent on how the company negotiates with the creditors and the total balance can be lowered by up to 40%-60%.
You would have to pay an upfront charge against the services provided by a settlement company. Therefore, you need to make two payments once you sign up for a settlement program. The first is the upfront fee and the second is the money that you deposit into the trust account. So, how can you take advantage of a life insurance policy to settle your debts?
Life insurance policies can be broadly categorized into two types: whole life and term life. A term life policy doesn’t accumulate cash value but offers death benefit. On the other hand, whole life insurance provides both cash value and death benefits. Due to this reason, whole life policies are costlier. If you’re thinking about borrowing money to finance a debt settlement program, you can do it through a whole life insurance policy. Whole life insurance policy value increases over time.
When you make premium payments for a whole life policy, the payment is split into two parts. One part is directed towards the death benefit and the latter part to form equity. Equity always works as an asset for you. When you borrow against the equity accumulated in your policy, the loan proceeds can be used to fund the payments for your settlement program. Here your whole life policy works as collateral for borrowing. More often than not, you can borrow an amount of up to 90% of the cash value of the whole life policy.
When you’ve got sufficient funds to settle your debts, you would ultimately be successful to eliminate your debt problems. Leading a life without debt carries a number of benefits. You can enjoy financial independence and get reasonable terms on different loan and credit products. Your whole life policy can truly work as a wonderful solution to clear up your debts.
