Life Insurance to solve the problem

The problems that the Collateralized Debt Obligation (CDO) crash created have been widespread and have left many people struggling to manage their finances. Previously it was all too easy to be casual about finance; jobs seemed secure, credit cards readily available and real estate prices on an upward path.

When everything changed it had a massive impact on the economy, employment prospects and new employment opportunities for those who found themselves out of work. Mounting bills and even home repossession became the current problems to face and at the same time the opportunities to use credit cards as a route out of debt diminished.

 There are two main solutions to the problem of debt which is appearing to get out of control; consolidation loans can gather all the debts into one and make it far easier to concentrate on a single monthly payment to settle the problem. Borrowing against a life insurance policy is the other alternative that people perhaps look to less frequently but look at it they should.

Consolidation loans remain available for those people who can get approval but of course that requires proof of the ability to pay the monthly installments. The obvious proof is a full time job with regular pay and a bank checking account showing current income and expenditure. A consolidation loan can bring every debt under one plan, credit card balances and other loans etc with the rate of interest certainly far lower than any the credit card companies charge.

The important thing is to reduce this core debt and another possible way to do it is to borrow against a life insurance policy which has a value. There is some research to do into a life insurance policy to check that the rules of the policy allow you to borrow against it.

 It must be a full life policy which accumulates a cash value and of course that value must fit in with your requirements and policy limits. It is unlikely that you will have accumulated any value in the first two years but from that point onwards a whole life insurance policy may be the solution you are looking for.

You will not have to have a good credit record to borrow against the policy because you are providing security. There is likely to be a limit on the amount you can release from the policy but as long as you are within that limit funds should be available.

The interest rate on life insurance loans is generally lower than any consolidation loan and there is likely to be greater flexibility in repayment.

Getting back on track is not easy, particularly when the financial problems have come as a complete surprise and no one foresaw what the world has experienced in the last few years. It may take time to research and make a decision on the best way forward but it will be time well spent because debt can increase if you do nothing about it. Look at life insurance policies as an option.

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About the Author: Jay

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