Life Insurance

When you’re young, it’s easy to think that there is always more time to save money. Why save and condemn money to a savings account when you’re 25 and have all the time in the world to make your fortune? For one thing, that time will fly by faster than you ever thought possible.

While it’s common for young people to spend more money than they save, if you’re still doing that at 45, it’s going to be very difficult for you to save enough money to retire comfortably. Worse than that, you certainly won’t have saved enough money to cover expenses associated with old age, such as long-term care services and medical expenses.

If you have found that the time flew by and you’re a retiree of modest means facing mountains of expenses, this article is for you. We will discuss the pros and cons of selling your life insurance policy vs. taking out a reverse mortgage.

What is a reverse mortgage?

A reverse mortgage is an agreement in which homeowners leverage the equity from their home to receive payments from their bank. You can use a reverse mortgage to receive a lump sum payment in the amount of the equity you have available or in the form of monthly payments. Alternatively, you could arrange to have a line of credit open.

At this point, a reverse mortgage might sound like a pretty good idea, and that’s what the folks that promote them would like you to believe. Unfortunately, reverse mortgages aren’t all that they are cracked up to be. In fact, they can be dangerous to your financial situation and leave you homeless

The dangers of a reverse mortgage.

When you read all of the advertisements, you will find that reverse mortgages are presented as a fantastic and virtually risk-free way to get your hands on a bunch of money. Many such promotions target seniors and make reverse mortgages sound like a great way to live a very comfortable retirement.

The only problem is the fact that reverse mortgages are not risk-free. While you will receive payments from your bank in exchange for your equity, there are strings attached. In this case, the strings feel like chains, as you will be required to live in the home for the majority of every year.

So what happens if you don’t want to stay in the same house all year long and you take an extended stay somewhere else? Your house could be foreclosed on, and you will lose the property. According to Investopedia, “Seniors plagued with health issues may obtain reverse mortgages as a way to raise cash for medical bills. However, they must be healthy enough to continue dwelling within the home. If an individual’s health declines to the point where they must relocate to a treatment facility, the loan must be repaid in full, as the home no longer qualifies as the borrower’s primary residence”.

Moving into a nursing home or an assisted living facility for more than 12 consecutive months is considered a permanent move under reverse mortgage regulations. For this reason, borrowers are required to certify in writing each year that they still live in the home they’re borrowing against, in order to avoid foreclosure.

A reverse mortgage may also impact your other retirement benefits, “as it may not be considered income for tax purposes, but it could impact your ability to qualify for other need-based government programs such as Medicaid or Supplemental Security Income (SSI). It’s a good idea to discuss this with a benefits specialist to make sure your eligibility won’t be compromised”. (Forbes.com)

Reverse mortgages don’t sound so great now, do they?

Keep in mind that when you take out a reverse mortgage, you will still be responsible for paying property taxes, HOA fees, insurance, etc. One of the worst-case scenarios that can happen when you take out a reverse mortgage is to suddenly suffer a decline in their health that requires a home health aide. It doesn’t even have to be a home health aide to send things into financial chaos.

All it takes is an unexpected expense. That expense could come from a health emergency, or a grandchild needs money for college.

It could be anything; the point is that when you’re faced with an unexpected expense that leaves you insufficient funds to pay your taxes, you will be left without a home.

Selling your life insurance policy.

Now that you know how dangerous it can be to take out a reverse mortgage, it’s time to look at an alternative, selling your life insurance policy. As it turns out, taking out a reverse mortgage isn’t the only way to free up a bunch of cash. Selling your life insurance policy is one of the safest and most efficient ways to raise a large amount of money.

Here’s what you need to know about the benefits of selling a life insurance policy. The first thing you should know is that selling a life insurance policy doesn’t come with any of the risks associated with reverse mortgages. In contrast to a reverse mortgage, it is not possible to lose your home because you sold your life insurance policy. When you sell your life insurance policy, you can use the money for anything you want. It’s not like going to a bank and taking out a loan.

Since selling your life insurance policy doesn’t come with any of the risks associated with reverse mortgages, it’s a much savvier choice for seniors looking to get cash fast.

The best way to sell your life insurance policy.

Once you have decided to sell your life insurance policy, you will need to find a buyer. Finding a buyer willing to extend a fair and generous offer is the most challenging aspect of selling a life insurance policy. More specifically, finding a buyer on your own is the most difficult part of the process of selling a life insurance policy. If you partner with a respected business like MRE Finance, you will be in expert hands.

Sell your policy through MRE Finance.

MRE Finance is one of the most respected companies specializing in helping seniors sell their life insurance policies. We will help you navigate the entire process from start to finish and line up a trusted buyer to give you a significant offer for your life insurance policy.

Once you sell your policy, you will be free to spend the money any way you choose. If you had taken out a reverse mortgage, you wouldn’t even be able to spend a few months away from your primary residence. When you sell your life insurance policy, you’ll have cash and the freedom to spend as much time as you please anywhere.

Want to find out what your policy could be worth? Try our Free Life Settlement Calculator and receive an estimated value of your policy in minutes.

If you prefer to speak with someone, give us a call at 1-800-521-0770.

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One Comment

  1. Although you may have to pay some taxes on the proceeds, you don’t need a reverse mortgage and won’t lose equity in your home. This is great info.

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