The best (and worst) ways to raise fast cash

Pros: Because whole life policies are typically poor investments, it's not like you'd be sacrificing very much. You can replace your coverage with cheaper term insurance.

Consider Deanna and Andrew Thomas (pictured), 43 and 41, of West Hills, Calif. When Deanna's income as a realtor fell, the Thomases racked up $16,000 in high-rate credit-card debt. So they're now planning to cash in the two whole life policies - $125,000 in coverage for Deanna and $150,000 for Andrew - they bought back in the '90s. They expect to receive $21,000. To replace their coverage, they plan to buy $1 million worth of much cheaper term insurance (cost: about $200 a month vs. $158 in whole life premiums for a quarter of the coverage). "We think it's a wonderful option because we don't like to be in debt," says Deanna. "Starting anew feels good."

Cons: You won't have any cash to get out unless you've paid premiums on a whole life policy for at least two years - and it may take many years more until your policy is worth a sizable amount. You'll owe regular income tax on the gains. Finally, it can take a few months to get replacement term life insurance, which you'll want to do before you cash out your whole life policy. The Thomases started the process in May and in mid-July were still waiting for their paperwork to be processed.

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