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Taking a loan on your insurance



A life insurance is more than just a death benefit. It’s a good investment option for those who know the ground rules and can choose smart.

It comes with several hidden benefits, and one of the most important would definitely be that fact that you can take a loan on your life insurance. Making money out of your insurance, can be a great way to generate some tax-free income, although you need to keep in mind that you need to structure the decision carefully.

Keep in mind that you can only leverage your life insurance and not make it an alternate income. Also, the amount that you wish to borrow depends on the different types of insurance that are available and the amount of cash that you have accumulated.

One of the pros of taking money from your insurance is that, the interest rate is low and there isn’t much of an approval process.

As intriguing as it sounds, you need to reconsider your decision carefully before jumping into it, because unlike a conventional loan, if you fail to repay the loan, the money would be deducted from your death benefit that your beneficiaries would get. Although the risk may look minimal, you need to keep in mind that the idea behind taking a life insurance is to cover the lives of your loved ones, financially.

Thus it is always essential that you stay away from easy temptations and, take a loan only when you know you’ll be able to repay it. 

So, how much loan can you take out of your insurance?

Technically it is possible for you to borrow up to the cash value you have accumulated within your permanent or whole life insurance policy, and you can do this by contacting your life insurance agent financial planner. Also keep in mind that unpaid interest can create trouble.

That is, if you fail to cover the full interest due, that unpaid interest will accrue as income and be added to the loan balance.

Unlike a bank loan or credit card, policy loans do not affect your credit and there is no approval process or credit check because, in simple words - you are just borrowing from yourself. Just make sure that you aren’t venturing into policy loans without assessing the risks.

So when an unexpected incident occurs, and you need to repair your house due to a natural calamity or pull in some cash for your small business, or pay for a brilliant college opportunity – go ahead and take benefit of the cash value that you have accumulated in your policy!

WRITTEN BY: BALAKARTHIGA.M

Dealing with your debt


If your bills give you anxiety and your debts are getting in the way of other dreams, it’s high time you sort out your debt and get it fixed. Laying out a strategy and committing to it, will definitely get you out of debt, as soon as possible.

1.       Budget

It is as easy and as difficult as it sounds. Knowing exactly what you owe comes from strong budgeting habits. The more you procrastinate this, the more trouble you will be caught up in. Financial experts even discovered that some people resist doing this, because they’re afraid of what they’ll find. There’s nothing like seeing you’re spending staring back at you, that forces a behavioural change.

2.       Consolidate

One of the smartest way to sort your papers out is to consolidate multiple credit-card and loan bills into one loan with one monthly payment can help you manage what you owe. This will not only make managing the debt easier, but will also make paying it a lot less stressful. 

3.       Prioritize

If you can't pay all your debts each month, financial experts recommend focusing on keeping current on secured debt--obligations like auto loans and mortgages that are backed by property. Set aside an amount each month in your budget just to pay off your credit. You'll get a psychological lift from erasing each card's debt.

4.       Consult

We agree that sometimes, doing it all by yourself can be tough. It might be very easy to get all stressed, depressed and anxious as you see those big numbers. These emotions can be blinding as well. Which is why, we recommend approaching an agency that will act as a consolidator, collecting one monthly payment from the debtor and disbursing funds to creditors and make it much less hard on you. 

5.       Consider

Once you’ve made all the consultations and prioritizations, you need to consider what your options are and choose the best one out of them. This choice has to be made consciously after deep thought, because it can make or break your debt plan!

Yes, getting out of debts isn’t easy. But it’s also not impossible. If you are able to cast aside your emotions, and think logically with a committed strategy, you can win the battle against debt.

WRITTEN BY: BALAKARTHIGA.M