As America’s aging population continues to grow, the need for advanced senior care planning becomes increasingly dire.
Yet long-term care insurance isn’t always an option for todays aging Americans, says Financial Advisor Magazine in a recent article. In those instances, advisors should consider recommending a reverse mortgage, taken as a line of credit.
“Clients over age 60 may have missed the window to purchase affordable long-term care insurance,” notes FA magazine, adding that each year after age 60 premiums become “extraordinarily high” and it becomes less likely for the applicant to medically qualify.
When long-term care insurance isn’t an option, advisors should consider recommending a standby Home Equity Conversion Mortgage (HECM) line of credit, FA Magazine suggests, explaining that borrowers are not required to pay monthly loan payments as long as they live in the home as their primary residence and continue to pay taxes, insurance and home maintenance.
“A unique feature of the HECM reverse mortgage many are surprised to learn about is its growing credit line,” FA Magazine says. “As the borrower ages, the reverse mortgage line of credit continues to grow, providing access to significantly more funds. This makes reverse mortgage a superior funding tool versus a traditional HELOC, which doesn’t grow over time and requires monthly payments.”
The article encourages advisors to check with a reputable reverse mortgage lender to see what resources they have available to help determine whether a reverse mortgage is a worthwhile option for their senior clients.
“Since senior care needs often come in the form of an unexpected broken hip, heart attack, etc., the best strategy for millions of seniors may be to set up the standby line of credit in advance, so funding is ready when needed,” FA Magazine says. “In the meantime, the credit line grows, steadily increasing available funds over time.”
Read the article here.
Written by Cassandra Dowell