Ways Of Cashing In Your Life Insurance Policy

Emergencies may always rise when one is expected to have some cash to fix the problem. However, they may fail to have the money and therefore must look for alternative source of funding. Cashing in your life insurance policy may always be one of the alternatives available. However, one must only use this as a last resort since they may be compromising the future financial status of one’s family.

There are always several ways one can cash on their life insurance policy. The first is selling it to a secondary buyer. This means that the buyer will pay one for the life insurance policies they hold and after their deaths, the buyer always take the death benefits of the policy. This is a fast way of getting cash but may not be very realistic to young policy holders. Another method is cashing of life insurance policy with the company that provides the cover.

One can also decide to take loans on their policy. This may not be available for those who just started saving as it is this money that usually act as collateral. This restricts the amount of money they can borrow since an individual is always not allowed to borrow more than what they have accumulated.

Cashing in one’s life policy may be a very quick and fast method to get money during emergencies. However, it usually has consequences which may not be very favorable to those selling their policy. Some of these include reduced death benefits to one’s family members. The money withdrawn is also exposed to taxation that may greatly reduce it.

If one cannot find alternative source of funding and decide to sell their life policy, they must always get the advice of a professional advisor. This may help them get the best deal for their policies. Chances are that there are going to be more than one bidder interested in buying these policies. One must always compare all the bids and get the most competitive amongst them.

A lesson you can learn from the Federal budget

President Barack Obama forwarded his 2013 budget to the Congress on Monday, February13, 2012. It predicts a whopping $1.3 trillion deficit for Fiscal 2013. If the Congress is unable to reach a compromise, mandatory across the board cuts that was agreed previously will go into effect.

The budget proposal includes “Mandatory” and “discretionary” spending programs. Federal government’s mandatory programs include Social Security, Medicare, Medicaid, and federal workers (civilian and military). Now take a look at your monthly expenses. You have your mortgage; health, property, and vehicle insurance; and others. Even they are compulsory, you can take a look at ways to reduce the monthly payment. Look at refinancing your mortgage to lower your monthly payment. Also, you can shop around for better rate on your various types of insurance policies.

Let’s look at “discretionary” spending. The Federal discretionary spending is set each year through appropriations. The current divided Congress may not be able to reach a compromise on this, especially in an election year. You are more fortunate than the Congress. You can review your discretionary spending such as eating out, going to movies, and other social activities. Tighten these spending during difficult times to manage your finances.