Borrow off my Universal Whole life insurance policy to pay off credit card debt
Hi Terry,
I nearly went bankrupt around 2014, after developing a serious autoimmune disorder. I was deep in credit card debt, but had worked two professional careers over 30 years. I’m divorced and have lived alone since 2007. I lost a great deal through the divorce. Since my fall from Grace/expensive illness/loss of professional income, I’ve raised my FICO score from 560 to 688.
Now, I am considering borrowing off my life insurance policy…$10,000, in effort to be nearly debt free on my credit cards. I figure that the interest I’ve been paying on that debt is taking much of my monthly income and I’ve stayed on that treadmill too long. I’m arranging to pay $500 per month back to the insurance company and plan to avoid use of credit cards.
Good or bad idea? I don’t sleep currently from the stress of this debt. Thank you for being a sounding board and voice of reason. This is especially meaningful for single older people like me. I look forward to your response. Thank you.
Terry Says
I think this is a GREAT idea — especially since you haven’t mentioned any dependents who would need the life insurance payout (reduced by the borrowings) if you were to die with the loan outstanding. And without the stress, you’ll likely live longer. Go for it!! And congratulations on all your hard work to dig out of debt, and raise your scores.
