Selling a whole life insurance policy that you no longer need provides a sudden financial windfall that you can use for almost any purpose you desire. If you sell a whole life policy, here are five things you might do with the funds you receive.
1.
Pay
Off Outstanding Debts
Paying off debts is one of the more financially sound ways to use the funds, for reducing debts has a direct and longstanding benefit. Any debt that you pay down will result in paying less interest over time. Depending on the duration and interest rate of a particular debt, the amount you save could be substantial.
As an added benefit, reducing your overall debt will also increase your credit score. Your credit score is made of up five criteria, with the amount of debt you owe accounting for 30 percent of the score. As you improve your credit score, you might be able to qualify for more favorable loans or other opportunities.
Should you decide to pay down debt, use either the snowball or avalanche method. The debt snowball pays your debts off in order of smallest to largest balance and can help accelerate the process by providing you with motivation as you pay debts off. The avalanche pays debts off in order of highest to lowest interest rate so you pay as little interest as possible.
2. Shore Up Your Retirement Savings
Many people who sell a whole life policy are approaching or in retirement, which makes shoring up retirement savings an obvious application. Most payouts are large enough that they can add a meaningful amount to people's savings.
If you are unsure whether you have sufficient financial resources for retirement, put the money you get into an investment account. The type of investment that is best for you will depend on your age, income level, life expectancy, risk tolerance, and many other factors. An investment advisor can help you make an informed decision based on your particular situation.
3. Pay a Family Member's Tuition
If you do not need the money for your own financial security, perhaps paying a family member's college tuition appeals to you. You can use the money to pay your own children's tuition so you do not have to use other savings and they do not need to take out loans. Alternatively, you can help pay a grandchild's, niece's, or nephew's tuition.
By paying a family member's college tuition, you will not personally benefit from the financial windfall. However, you will make a significant investment in the life of someone whom you love.
4. Purchase a Second Home
Depending on the size of your settlement, you may be able to purchase a second home with it. If you have a large policy and property prices are inexpensive where you are buying, you might be able to purchase something with cash. Even if paying that is not possible, though, you probably can at least make a down payment.
From a summer home to a winter getaway, you have many attractive options for second homes. Consider where you would like to spend time, and see if a property is in the area that meets your needs if this is what you would like to do.
5. Go on a Major Vacation
An alternative to purchasing a second home, you can also use the funds to pay for a major vacation. Do not limit yourself to weekend getaways in the region. With the money from selling a whole life insurance policy, you can fund a once-in-a-lifetime vacation.
If you would like to sell a whole life insurance policy, contact
Habersham Funding, LLC.
