Raising Cash under Duress and the Role of Cash Value Life Insurance: An Educational Example.

Consumers face hard choices when they need cash quickly. Hard choices can lead to emotional or economically unsound decisions. Traditional classroom discussions of raising funds to pay for expenses usually focus on generating income, borrowing, or the sale of real and financial assets, if hardship is discussed at all. However, many families have additional “non-traditional” sources of cash. This article examines the use of life insurance surrenders and policy loans as a source of funds for both routine funding needs as well as a source of emergency financing. The article concludes with a review of the economic considerations of life insurance for Insurance and Financial Planning educators and students.