Description: Know how you can use your whole life insurance policy to finance your debt management program.
Everybody wants to get out of debt since debt can really make their life troublesome. The problems get worse when your debts go beyond your control. It’s difficult for you to achieve financial stability if you have piled up excessive debt. In these circumstances, you obviously start looking for various options to bring yourself out of debt. Debt management is a well-known debt relief option that many debtors turn to. Nevertheless, you should keep in mind that you have to fund the debt management program. If you’re cash strapped, how can you fund a debt management program? A life insurance policy can help you out. You can borrow from your life insurance policy to finance your debt management program and take control of your finances once again.
Under a debt management plan or program (DMP), a credit counseling agency or debt management company works as a third party and negotiates with your creditors to reduce your interest rates and monthly payments. A new repayment plan is set up after evaluating your budget and finances. All your unsecured debts are combined into a single monthly payment that you need to send to the debt management company which in turn distributes this payment among your creditors. The amount of this payment is decided in such a way so that you don’t face any difficulties to afford the payment. By sincerely following a DMP, you can achieve debt freedom in 3-5 years.
How a life insurance policy can be utilized to fund your DMP? There are two main types of life insurance policies: term life and whole life policies. Term life policies don’t come with cash value benefits but provide death benefits. In contrast, buying a whole life insurance policy can help you enjoy both cash value benefits and death benefits. For this simple reason, whole life policies come to you at a higher cost. If you want to take out a loan to finance your DMP, you can easily do it with a whole life policy. Whole life policies have become quite popular due to the cash value accumulation benefit.
When you borrow from a whole life policy, the loan proceeds can be used to finance the payments for your DMP. Here you’re using your whole life policy as collateral. You can often borrow a loan of up to 90% of the accumulated cash value of the whole life policy. In this way, your whole life policy can really work as an outstanding solution to eliminate your debts.
