While some have been forced to utilize credit cards to make ends meet, others have taken withdrawals from their 401(k) or even borrowed from their life insurance plan – the latter of which, according to Forbes, can be one of the better options.
Money has been hard for many families this year due to inflation, forcing many to look for alternative sources of income to get by.
Borrowing From Life Insurance
Borrowing money from the cash value of a life insurance policy “can be one of the most convenient, low-cost financing options available.” Permanent life insurance policies (whole, universal, and variable life options) will usually provide this option.
Term life insurance plans, on the other hand, are less expensive and protect people at specific stages in their lives, such as when they are working or paying off a mortgage.
If you choose to take out a direct loan, it operates effectively by allowing you to borrow from yourself. Almost like a payday loan. Because the vested amount in your account serves as collateral, you will not have to pay taxes on the loan, which is a significant benefit.
Your credit will not be reviewed if you are authorized. However, the insurance company will charge interest — but, once again, the perk is that it is negligible and, in certain situations, as little as 0.25% or 0%.
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Using Credit Card
The most recent Consumer Price Index, issued in mid-September, revealed that the total increase for all products tracked by the CPI (such as groceries, utilities, and medical care) is 8.2% year on year, one of the largest increases in decades.
Salaries, on the other hand, have not kept pace. According to CBS, citing a Bankrate survey, 55% of Americans believe their incomes are not keeping up with inflation.
According to experts, some ways in which people choose to chase the money they need to get by are more advantageous than others. It’s best to look for alternatives to credit cards because they merely add to the amount of debt you’ll have to pay off.
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