Debt consolidation means obtaining one large loan to pay of your different high interest credit card balances. You can consolidate your debt several different ways, one of which is through your whole life insurance.
Debt consolidation has become very common among the millions of people who struggle every day just to pay their minimum balances. For some, it is the only way to stop living paycheck to paycheck, and to regain control of their finances.
The major benefit to debt consolidation is convenience. With a debt consolidation loan, you simply pay back your debt with one payment every month, instead of balancing all your different balances. It is key to find a new loan with a much lower interest rate to consolidate your debts.
If you have whole life insurance, you can borrow against its value for debt consolidation. This is a compelling method of debt consolidation for those without any major tangible assets (like a house) to use as collateral.
The really unique thing about borrowing against the value of your whole life insurance for a debt consolidation loan is that there’s no time limit to pay it back. In fact, you don’t really have to pay it back at all. If you don’t pay it back, the amount of the loan is deducted from the amount paid to your beneficiaries.
Taking money from your beneficiaries to use for credit card debt consolidation is a risky proposition. If you fail to pay back the loan, your wife/husband/children will be out of luck financially. Be sure to discuss the consequences with them of taking out the loan with them. Is it really worth the temporary relief you’ll get from your debt consolidation loan to rob your family of their finances?