Let’s be honest-credit card debt is one of the most stressful types of financial pressure to deal with. The interest piles up quickly, minimum payments barely scratch the surface, and the balance never seems to go down. You tell yourself you’ll get on top of it next month, but before you know it, your available credit is maxed out and your peace of mind is gone.
If this sounds like your current reality, you’re not alone. Many responsible, hardworking people get caught in the trap of high-interest credit card debt, especially during unexpected financial storms like medical emergencies, job loss, or just the rising cost of living.
But if you’re one of the few who had the foresight to get a Variable Universal Life (VUL) insurance policy, you may already have a secret weapon-an investment fund that you’ve been building over the years. Yes, your VUL could be the tool that helps you finally pay off credit card debt and breathe again.
This article explores how-and when-to use your VUL investment wisely for credit card debt relief.
Understanding VUL: More Than Just Life Insurance
Before diving into the “how,” let’s quickly revisit what a VUL policy really is.
Variable Universal Life insurance is a flexible financial product that combines two powerful elements:
- Life insurance coverage to protect your family
- An investment component that allows your money to grow through various managed funds
Over time, as you regularly pay your premiums, part of your payments builds a cash value that you can access. That’s right-this isn’t money locked away forever. Once your investment has grown sufficiently (usually after 3-5 years), you may be eligible to make partial withdrawals from your policy or take out a policy loan.
Why Use Your VUL to Pay Off Credit Card Debt?
Credit card debt is notoriously expensive. With interest rates ranging from 18% to over 30% annually, every month that passes means more of your money is going toward interest rather than the actual principal. That’s why many financial advisors recommend settling credit card debt as quickly as possible.
Now, imagine you have ₱250,000 sitting in your VUL’s cash value and your total credit card debt is around ₱120,000. You could technically wipe out your entire credit card balance today using a partial withdrawal, cutting off those interest charges immediately and simplifying your finances.
It’s not always the first strategy people consider, but when debt becomes unmanageable, it’s worth exploring.
A Personal Story: Camille’s Turning Point
Camille, a 34-year-old freelancer, had racked up ₱100,000 in credit card debt after dealing with a medical emergency and months of inconsistent income. The bills became a monthly source of stress-minimum payments were draining her earnings, and she couldn’t see a way out.
Then she remembered her VUL policy, which she had been paying into since she was 26. After checking, she discovered she had over ₱210,000 in investment value. With the help of her financial advisor, she withdrew ₱110,000-just enough to cover her credit card balance and some fees.
She didn’t touch the rest. Today, Camille is debt-free, rebuilding her VUL, and has even started saving for a home.
How to Withdraw Funds from Your VUL
If Camille’s story resonates with you, here’s how to approach a VUL withdrawal strategically:
Step 1: Check Your Cash Value
Contact your insurance provider or access your online policy account to check your current investment value. This will tell you how much is available for withdrawal or loan.
Step 2: Consult a Financial Advisor
Withdrawing money from your VUL is a big decision. Talking to a licensed financial advisor can help you understand:
- How a withdrawal will affect your death benefit
- Any fees or charges that apply
- Whether a loan might be better than a withdrawal
Step 3: Calculate What You Need
Only withdraw what’s necessary. If your debt is ₱95,000, don’t withdraw ₱150,000 just to be safe. Taking out too much may reduce the policy’s ability to grow over time.
Golden rule: Try to keep at least 50% of your investment intact. This ensures your VUL still grows and offers some protection in the long run.
Step 4: Settle the Debt Immediately
Once the funds are released, don’t delay-pay off your credit card balance in full. Get written confirmation from your bank that the balance is cleared.
Step 5: Rebuild and Reset
Your VUL has helped you through a rough patch. Now it’s time to let it recover. Continue your premium payments and monitor your policy performance. Consider setting aside money each month in an emergency fund so you don’t need to rely on credit cards again.
Pros and Cons of Using VUL for Credit Card Debt
✅ Pros:
- Instant debt relief
- Stops high-interest charges
- Avoids taking on new loans
- You’re using your own money-not borrowing
❌ Cons:
- Reduces long-term investment potential
- May lower your life insurance death benefit
- Fees or taxes may apply
- Risk of policy lapse if not carefully managed
Final Thoughts: Relief with Responsibility
Debt is a burden. It messes with your mental health, strains your relationships, and limits your freedom. Credit card debt, in particular, is designed to keep you paying forever if you’re not careful. That’s why finding a way out-especially one that doesn’t involve another loan-is such a game changer.
Withdrawing from your VUL insurance investment to pay off credit card debt is a smart option if done with care. You’ve been disciplined enough to invest in a VUL; now that discipline can pay off by giving you a clean slate.
But remember: this isn’t free money. Your VUL is still your long-term safety net, so take only what you need, stay informed, and rebuild after the storm.
If you’re feeling buried by debt, your VUL might just be the lifeline you’ve been waiting for.