Author: Shiloh Kelly
Getting a college degree is a worthwhile but expensive investment. Because of the cost, a large percentage of students often need to get a loan to complete their education.
Paying off student debts can be difficult, but it might be less complicated with a life insurance policy.
This article will provide tips on using life insurance to repay student loans.
Let’s get started.
Can a life insurance policy be used to repay student loans?
Yes, you can repay your student loans with life insurance depending on your coverage. Instead of getting rid of your insurance policy, it may be smart to borrow from it to pay off your debt.
However, selling off your life insurance policy if you have enough savings to go without the insurance coverage may be a good decision as well.
Ways to Repay Student Loans from a Life Insurance Policy
Life insurance policies are different, and the methods of repaying your student loans using a life insurance coverage also differ. You can choose to borrow from your life insurance or sell it.
Here’s how it works:
How to Borrow from your Life Insurance
The first step to borrowing from your life insurance is to confirm from your insurer if your policy is a cash-value policy, for example, a whole life or universal life policy.
If it is a cash-value policy, ask your insurer to email you an “in-force illustration,” which estimates your life insurance worth and how it’ll change over time. This estimate will tell you how much you can borrow according to your policy.
The next step would be to ask your insurer to email you a policy loan request – a form to fill in your contact information and how much you’d like to borrow from your policy.
After filling out the form, submit it, and you should receive a check for your requested amount between 7 to 10 days. You can cash the check and pay off your student loans with the funds received.
Sell your Life Insurance
You may want to consider selling off your life insurance if you don’t have a cash-value policy. Selling your life insurance is a straightforward process.
With a life insurance settlement, you can easily cash in on your policy to pay off your student loans and stop making monthly payments. This policy is often purchased by investors. Nevertheless, you may need a broker or life insurance settlement company that can act as the middleman and help your find an interested buyer. Once you receive your cash, you can use it to pay off your student loans.
Getting rid of your debts can help improve your relationships with your cosigners and credit score. It can also help you save money on interest. However, you should consider speaking to a financial advisor or credit counselor before borrowing or selling your life insurance to repay your student loans. You also want to ensure that you work with a trustworthy life insurance settlement company. You may reread this article to learn how to