Hey…
My husband and I are in our early 30s, and we have a life insurance policy with American Income Life (AIL). We don’t drink, smoke, or use drugs, and we’re healthy. We’ve accumulated some debt trying to make ends meet. What are the pros and cons of keeping or canceling our life insurance? By the way, it’s a term life policy, if that makes a difference.
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How much debt do you have? What’s the interest rate on that debt? What’s the premium and face amount of the life insurance? What’s the cash value?
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Yeah you don’t grow money and have rising debt at the same time.
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Finances are a tad confusing to me at times. Could you elaborate on what you mean? My brain isn’t comprehending it.
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I started at an agency for one of the top mutual life insurance companies back in 2019. They brought in interns with finance degrees, but I was shocked by how little they knew about the products and the strategies they could support.
Expecting to be good at insurance and financial services without proper training is like expecting to be good at nursing tasks without any training.
Here’s my point: if you’re thinking about canceling your policy to pay off debt, any funds you grow could be at risk depending on your debt.
For example, if you have $25,000 in assets (like an IRA, cash, 401k, etc.) but also $25,000 in debt, your net worth is ZERO.
So in one month, you might gain $500 in your accounts, but if you lose $700 to credit card interest, fees, and payments, you’re actually down $200 that month. The $500 growth is just an illusion.
Now, if you have $25,000 in assets and no debt, your net worth is truly $25,000.
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One option is to convert or replace your policy with something cheaper or that provides both a monetary benefit and insurance. If you cancel your policy, your debt could get worse if something bad happens. I’d suggest talking it over with your agent or broker to find a solution that keeps you covered and eases the financial strain. 
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AIL has terrible prices and shit cash value. go get yourself a 30 year convertable term for like $15 f
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How long ago did you get that policy? what kind of policy is it? term? permanent? is there cash value? If there is cash value, you can borrow against that cash to pay down debt.
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What’s more expensive, that small bill or losing an income unexpectedly?
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I’d need more details to give specific advice, but here are some general pros and cons:
Cons:
- Canceling your insurance while you’re young and healthy can cause problems later. I meet people in their 50s and 60s who need life insurance again, but their term expired or they canceled it. Rates when you’re 20+ years older are much higher, sometimes 5 to 10 times more. Plus, some health issues are inevitable, even for healthy people.
- The money you’re paying for life insurance could be used to pay off your debt faster. It might be worth calculating how much quicker you could be debt-free with those extra payments.
Pros:
- You get to keep your low-cost life insurance.
That’s about it.
EDIT: I assumed you have a term policy. If you have a whole life or IUL policy, that changes things. Many people actually use participating whole life policies to help pay off debt.
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It’s a whole life policy. Wait… how do people use it to pay off debt? Is that legal?
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Pretend that one of you died 5 minutes ago. Take a look around at your financial situation. Now snap your fingers and come back to life. Which way are you better off, with or without , life insurance?
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This bc anything can happen unrelated to health