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#166: Using a reverse mortgage to manage long term care insurance premium increases


The postal service has delivered some very bad news to you in the form of a major increase in the quarterly premium for both of your Long-Term Care Insurance policies. None of the choices offered is savory: In order to maintain your current coverage (which includes an annual increase in benefit), your combined quarterly premium will be increased by a four figure total each quarter. Needless to say, the company offers no guarantee that there won’t be further premium increases in coming years.There are two other options offered: dropping the inflation rider, or reducing the coverage from lifetime to a limited number of years.

While you are mortgage and consumer debt-free, paying the new quarterly amount needed to keep your current level of coverage intact is going to mean changing the Systematic Withdrawal Income Plan you have set up on your investment accounts, increasing the very real possibility of running out of money before you run out of years. Both in your late sixties, you have so far been largely free of major health problems, but are afraid of losing the protection against deteriorating health in your later years.

Consider tapping your housing wealth,(the equity built up in your home) to finance the Long Term Care insurance premiums. With a government-guaranteed HECM reverse mortgage, you can withdraw funds as needed to pay the premiums needed to continue your present levels of coverage (including the inflation riders on the policies). You will be under no obligation to make monthly mortgage payments; the home itself will serve as collateral for the loan begin to. Whatever portion of your home equity is not being used will continue to grow, providing a reserve for possible future increases in the insurance costs. Meanwhile, your investment income plan can continue undisturbed.

If you’d like to see what you might qualify for with a reverse mortgage in Indiana, or to download your Reverse Mortgage Guide Click Here (and scroll down).

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This is a hypothetical situation. Borrower must occupy home as primary residence and remain current on property taxes, homeowner’s insurance, the costs of home maintenance, and any HOA fees.