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should i cash out a life insurance policy to pay off debt if i have other adequate life insurance?
I have a policy that would cash out at $1200 with no tax penalties - my father purchased it for me at age 16. I have good life insurance of my own as well as through my employer - should I take the 1200 and put it toward debt payoff or keep it so the death benefit goes to my family? I'm only 35.
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kraypay10
1 year ago
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Tough to say. Don't know your debt situation, your income, your family situation, etc.
$1200 is not alot of money, and for many at 35, it would be a small drop in the bucket for overall debt.
You need to look at what growth that $1200 is likely to have (what type of yield are you getting) and compare to your interest rates that you are paying.
You also need to look at what goals you may have and see how that money may fit into them.
I would be careful about one thing though. Though it may have been stated that there are no tax penalties for cashing it out, it is likely to be considered taxable income if you cash it out, and depending on how much you make, what state you reside, etc, up to half the money pulled out can go toward taxes.
phnxangell 1 year ago