Cashing out the policy and buying new coverage on her son

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Reference no: EM132221827

Family situation: GrandMom is owner of a $100,000 Universal Life policy on her son aged 32. He is married with two children ages 3 and 6 months. He has a $50,000 group term life policy from his employer. He is married with his spouse covered with a $125,000 group term policy from her employer. The two children each have $10,000 whole life policys. This family has over $8,000 in debt from credit cards. The universal life policy has $7,000 in its cash accumulation. Policy loan interest rate is 7%. GrandMom wants to help her son and family to reduce their debt. She is concerned about paying the 7% loan interest to borrow funds. She is considering cashing out the policy and paying off debt. Should GrandMom take out the cash as a loan and continue paying premium on the policy or cashing out the policy and buying new coverage on her son? Please provide a solution to the above situation and supporting reasons for your answer.

Reference no: EM132221827

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