Should I cash out one of my life insurance policies and pay off my debt?

My parents got me a whole life insurance policy when I was young. Now I'm 24 and have a full time job (have worked here for over a year) and am receiving term life insurance from my employer. Do you think it would be a smart idea to cash in my Whole Life policy and pay off all of my debt. Instead of paying high interest rates and barely getting any of the principal paid off i could pay it all off and save my money for other things. I don't need two insurance policies right?! I am engaged but I don't have any children, and don't plan to for another 5-6 years. P.S. I'm not really looking for advice on getting an extra job, I'm looking for financial advice about Insurance. I have a Bachelors degree, I can do freelance work if i have to. I already work full time tho so I am avoiding getting another job. I would rather be broke than stressed to death, hah. I do own the policy, its in my name. I already talked to my parents about it and they are fine with any decision i make. Yall are giving me some really good things to think about. Appreciate the advice :) I'm just now starting to understand all of my insurance/disability/and 401k stuff, and man is it confusing!

Asked By: savanna k - 5/8/2009
Best Answer - Chosen by Asker
My advice is to call a LOCAL agent; even your auto insurance agent, if local, and have him/her do a free Financial Need Analysis (FNA), or other Total Need Program, to help you determine in your own mind, and to meet your personal goals and objectives, how much coverage, and what type you need to reach those personal... More
Answered By: james m - 5/9/2009
Additional Answers (9)
yeah do it you only have one life so you don't really need more than one policy sense you don't have children, there really isn't much to worry about wait what about a husband/boyfriend??
Answered By: fire lilly - 5/8/2009
Do you WANT whole life insurance? What is the financial GOAL of that policy... More
Answered By: mbrcatz - 5/8/2009
I would cash it in. But check first to see if the policy has dividends. If it does you might want to just withdraw all the dividends instead. If not, then I would cash it in and get term life insurance when you have a family.
Answered By: car253 - 5/8/2009
Does your policy allow for a loan? because some whole life policies do and that would be a good option since you would be able to keep your policy and pay your debts too... More
Answered By: NatyB - 5/8/2009
Typically, whole life is not a great investment. Given the limited information you have given, cashing out and paying off debt seems to be the correct move. One advantage, your credit score is going to improve quickly, and future credit costs will be lower because of it. Be aware there will be tax liability on the... More
Answered By: patrick - 5/8/2009
you have several choices here. first of all, with regards to your term policy at work, it is just that, term. it will run out, and as you get older insurance only gets more expensive... More
Answered By: agentbenere - 5/8/2009
Your term life insurance through work is likely inadequate. My advice is to get advice from a financial professional you can trust. You may have a really good policy that you don't just want to throw away, but then again it might be the right choice.
Answered By: Insurance - 5/8/2009
When your parents purchased whole life for you, it was probably at the best rate you will ever see for whole life. It would depend upon the face value and current cash surrender before you could be advised properly. I recommend some whole life (a small amount when you are young as it is rate stable and as long as you... More
Answered By: JEANNIE - 5/8/2009
You are 24 and early in your career. You work at a job that offers term insurance... More
Answered By: insuranceguytx - 5/9/2009
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