Are there Other Non-Traditional Sources of Health Care Funding?
Home Equity / Reverse Mortgages
Almost all elders have a strong desire to be managed at their home. Many times, the only valuable asset owned is the elder’s principal residence.
Banks will set up a credit line secured by the equity of the house. A checkbook is supplied allowing the elder to borrow up to the limit of the loan. All loans must be paid back based on the terms of the loan, usually monthly based on a fifteen-year amortization.
With a reverse mortgage, the mortgage company, (a bank), advances to the elder a monthly amount secured by the equity of the house. The amount advanced depends on the elder’s age, net value of the house and the interest rate. It is called a reverse mortgage since the bank pays the elder monthly rather than the other way around.
The loan and accrued interest is payable only after the elder’s death or the sale of the home. This assures the elder a residence while alive.
HUD through the FHA usually guarantees these types of mortgages. Certain reverse mortgages are placed with Fannie Mae.
Due to abuses in the past, including excessive fees and overcharges, this type of mortgage has lost popularity. When considering, be sure to look at all the costs of the borrowing (usually added to the balance of the loan) comparing it with a conventional home equity loan. However, with rising real estate values, decreasing equity portfolios and reasonable fees, this type of funding can be used in the right situation to provide funding for health care needs.
Using Life Insurance including Accelerated Benefits
An elder with a life insurance policy should review the provisions of the policy with the company or the agent to determine whether the policy can be converted to a long-term care policy.
The cash surrender value of a life insurance policy can be used to fund the elder’s unexpected medical care.
Some life insurance policies provide if the insured is terminally ill, a percentage of the face value of the policy is available to be paid to the insured prior to death usually with no restrictions on use. These payments are usually tax-free if paid to the terminally ill insured and reduce the face value of the policy.
Viatical Settlements
If the policy does not provide for accelerated benefits, the terminally ill insured can sell the insurance policy to someone who is buying it as an investment as a discount from the face amount of the policy. The buyer receives the face value of the policy when the insured dies. Usually, the sale of the policy is tax-free.
Home Equity / Reverse Mortgages
Almost all elders have a strong desire to be managed at their home. Many times, the only valuable asset owned is the elder’s principal residence.
Banks will set up a credit line secured by the equity of the house. A checkbook is supplied allowing the elder to borrow up to the limit of the loan. All loans must be paid back based on the terms of the loan, usually monthly based on a fifteen-year amortization.
With a reverse mortgage, the mortgage company, (a bank), advances to the elder a monthly amount secured by the equity of the house. The amount advanced depends on the elder’s age, net value of the house and the interest rate. It is called a reverse mortgage since the bank pays the elder monthly rather than the other way around.
The loan and accrued interest is payable only after the elder’s death or the sale of the home. This assures the elder a residence while alive.
HUD through the FHA usually guarantees these types of mortgages. Certain reverse mortgages are placed with Fannie Mae.
Due to abuses in the past, including excessive fees and overcharges, this type of mortgage has lost popularity. When considering, be sure to look at all the costs of the borrowing (usually added to the balance of the loan) comparing it with a conventional home equity loan. However, with rising real estate values, decreasing equity portfolios and reasonable fees, this type of funding can be used in the right situation to provide funding for health care needs.
Using Life Insurance including Accelerated Benefits
An elder with a life insurance policy should review the provisions of the policy with the company or the agent to determine whether the policy can be converted to a long-term care policy.
The cash surrender value of a life insurance policy can be used to fund the elder’s unexpected medical care.
Some life insurance policies provide if the insured is terminally ill, a percentage of the face value of the policy is available to be paid to the insured prior to death usually with no restrictions on use. These payments are usually tax-free if paid to the terminally ill insured and reduce the face value of the policy.
Viatical Settlements
If the policy does not provide for accelerated benefits, the terminally ill insured can sell the insurance policy to someone who is buying it as an investment as a discount from the face amount of the policy. The buyer receives the face value of the policy when the insured dies. Usually, the sale of the policy is tax-free.
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