debtNorthwestern Mutual did a Planning and Progress Study for 2015 and one very interesting fact that they found was that only 51 % of Americans own life insurance, and more importantly, only 23% of Americans know that life insurance can be used to pay mortgages and outstanding debt.

One way is to withdraw money from a life insurance policy – You can withdraw money from your life insurance policy to pay off debts if your policy is either a whole life or universal life policy, but you can’t from a term policy. The amount you will be able to borrow depends on how much cash value you have accumulated over time by paying your premiums, and will only be a percentage of that accumulated value.

Another way is to utilize a life settlement – A life settlement enables a policy owner to have their policy appraised and sell it through a financial transaction. However, there are usually restrictions with these policies in regards to life expectancy. In a life settlement, the client can sell their policy for an amount higher than the cash surrender value (the value you would receive if you cancelled your policy), but less than the full death benefit. This in turn enables the seller to fund a variety of needs — from retirement and lifestyle choices to healthcare and planning opportunities.

In these two options, keep in mind that if you want to maintain your insurance policy in the first option, you will have to go on paying the premium. In the life settlement option 2, the person who buys the policy now becomes the policy holder, and they will be the ones to pay the premium and collect the end benefit.

If you have any questions on sound financial strategies for your particular situation, you can call me, Keith Mooney, at 1-847-382-2600 or visit All of us at Mooney Lyons are here to help ease the complexity and reduce the anxiety in the many areas of retirement planning.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

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