How to Use Life Insurance to Pay Off Debt

​It's not easy to pay off debt. It's harder than you realize. However, if you have a life insurance policy, then you can use it to pay off debt. The average American family always suffers from the burden of credit card debt, a home mortgage, student loans, and other expensive bills. Here are some points you need to know about how to sell your life insurance to pay off debt.

Can You Use a Life Insurance Policy to Pay Off Debt?
Although it depends on what kind of life insurance you have, you always have the choice to use your policy as payment for a debt. Don't rush, especially if your loved ones will need the death benefit. However, if you think you have enough savings, then you can sell your term life insurance. You can also sell your permanent life insurance. That's one smart move when paying your debts.

What Kind of Debt Can You Pay With Life Insurance?
No matter what kind of debt you have, one of the options for payment will always be a life insurance policy. When you pay off debt, one of the best things you should do is to pay the debt with the higher interest. After that, you work on the debt with a lower interest. The insurer doesn’t care at all if you decide to sell your policy. They also don’t care if you use the money to pay off your debt.

What Are the Pros?
One of the biggest benefits of selling your life insurance is that you can use it to pay off debt. Debt can have serious effects on your lifestyle. Frequent calls from banks and collection agents may push you over the edge. In that case, you can always use your life insurance policy to pay off the debt that is high already. Peace of mind later in life is more important than you would ever think.

What Are the Cons and Alternatives?
One of the disadvantages of selling your life insurance is that your loved ones will lose the death benefit. If you haven't saved enough for your retirement, that could put you in a tough situation. If your income suddenly stopped, you would be in big trouble. It’s still always better to have alternatives for debt payments. One of these is to consider applying for a home equity loan. 

How Can People Sell Their Policy?
You should weigh both the pros and cons of using life insurance to pay off debt. Before you do this, make sure that you'll not pay that much for fees. Also, ask your insurance company if they can allow you to sell only a portion of the policy. If you think you have too much equity on your name, then this is a good option.

Some Final Words
It’s good to have a life insurance company that you can trust. If you have life insurance, you have plenty of options on how to use it. Life insurance can help you pay off debt. You should get life insurance now if you want peace of mind someday.

At Gary Bacon Insurance, we do our best in making sure that our clients are well-protected with affordable and comprehensive policies. We make sure to go the extra mile to help you with your needs. To learn more about how we can help you, please contact our agency at (252) 644-3353 or Click Here to request a free quote.