Reverse Mortgages and Long-Term Care Insurance

Money borrowed with a reverse loan can be use for any purpose. Two common uses for reverse mortgage proceeds are paying for medical care and long-term care (LTC) insurance. Here are some things to consider about using a reverse loan to buy long-term care insurance.

1. Would your spouse or other family member suffer a financial hardship if you had a condition that requires you to pay a lot of medical expenses out of pocket? Jonathan Pond writes at AARP that “Single people don’t face that risk, so all other things being equal, they have less need for LTC insurance.”
2. Can you afford the premiums? Some LTC policies increase premiums over time and that needs to be taken into account. Long-term care coverage is probably not affordable if you have to use more than 10% of your income, according to AARP. Take a look at your net worth and how much savings you expect to have during retirement. Once you crunch those numbers you can go back and see how much money you need from a reverse home mortgage to comfortably afford the LTC premiums.
3. Do you already have health problems or a family history of certain illnesses? If you truly believe you may have certain health issues as you age, a LTC insurance policy could be a smart financial move.
4. Shop around for the right features. Not all LTC policies are the same. Look for policies that pay for nursing home expenses and comprehensive home health coverage.

Is a Reverse Mortgage Right for You?

Ask as many questions as necessary before signing up for a long-term care insurance policy. It’s important to know exactly what is and is not covered, as well as what it can cost you. To determine if a reverse mortgage can help pay for LTC coverage, make an appointment with a reverse mortgage counselor. You can also begin comparing reverse loan products here.

This entry was posted on Wednesday, December 30th, 2009 at 1:19 pm and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.