If you are getting to retirement age, you’re probably starting to consider your options when it comes to financing your retirement. Two common options for retirees are life settlements and reverse mortgages. Most people are choosing the latter because it sounds “safer,” but there are a lot of reasons that you should consider getting a life settlement instead.
Why Shouldn’t I Choose a Reverse Mortgage?
1. Reverse mortgages have to be repaid when you move out of your home. Say that you get put into long term care because of an injury or illness. If you are paying off a reverse mortgage, the company can declare that you have “moved out,” which forces you to start paying off your loan.
2. You still have to pay for your home costs if you have a reverse mortgage. If you do a reverse mortgage, you still have to pay property taxes, maintenance, and school district taxes. You also have to continue living there if you want your payments to be delayed.
3. If you get a reverse mortgage, your children may not get your home unless they pay for it. Reverse mortgages have to be paid in full after you move out, which usually means that the home needs to be sold, even if you’ve passed on. Many people have lost family homes because of a loved one taking out a reverse mortgage.
4. A reverse mortgage will slam you with high fees. Instead of offering the financial freedom we should all have in retirement, reverse mortgages will actually make your life a bit more difficult because of the high loan-related fees.
5. A reverse mortgage will put you in further debt with high interest rates. High interest rates and debt will plague you if you decide on obtaining a reverse mortgage, and your children will have to deal with your debt.
Why Should I Consider Reverse Life Insurance (more commonly known as a Life Settlement)?
1. Life settlements can pay for long term care. If you get into a scenario where you have to move into a nursing home or long-term care facility, it’s not an issue. If you took out a life settlement, you can get some of your long-term care covered instead of adding more financial burden like a reverse mortgage would.
2. Getting a life settlement means that you no longer have to pay life insurance premiums. Once you get a life insurance settlement, that means you’ve cashed in your life insurance and you don’t have to pay for it anymore.
3. With a life settlement, you can provide your children with an early inheritance. If you cash in your life insurance with a life settlement, you can help your loved ones out while you’re still alive instead of giving them financial burdens after you’re gone.
4. A life settlement will provide you with financial freedom in your retirement. The immediate need for life insurance has usually passed by the time you get to retirement age. Your kids are grown up and your funeral may be paid for. That means, you can cash in that money and enjoy your retirement by traveling or doing hobbies.
5. A life settlement will help you to pay off your debt. If you decide on a life settlement, you can use the money you’ve cashed into pay off your debt. That means your family won’t have to deal with any of your debt after you pass away.
Now that we’ve taken a look at all of these reasons, which will you utilize for your retirement? The answer seems pretty clear from here. Instead of dealing with the hassle of reverse mortgages, why don’t you consider a reverse life insurance for your retirement financing?