Do You Understand the Pros and Cons of Reverse Morgages?

Since the tough economy has depleted the income of many older folks, but still left them with home equity, one solution keeps popping up. That is using a reverse mortgage to access that home equity as cash. But these transactions are not for everybody. Get the simple pros and cons of reverse mortgages for seniors. 

Pros of Reverse Mortgages

Here are some of the benefits and advantages of these transactions for older homeowners who need more cash or income.

• You get more income or cash with no tax liability.  You can decide if you want to take the money in a lump sum payment, with periodic payouts, or as a line of credit.
• You can stay in your home as long as you like and can keep up other obligations of home ownership (like property taxes, insurance, etc.) In addition, the title the home remains in your name. You are stil the home owner.
• You do not have to have your mortgage fully paid off, though most qualifiers do have substantial home equity.
• If the reverse mortgage loan balance is less than your home equity, you (or your heirs) keep the rest.
• The money should not effect your Medicare or Social Security income.
• Unlike other types of loans, like a home equity loan, you do not have to make payments for your reverse mortgage. You only pay the loan off when you leave your home. The money to pay it back usually comes from selling the home.
• You do not have to qualify for a reverse mortgage the same way you would for a regular mortgage or equity loan. Instead of using your income and credit rating, the loan will depend upon your home equity, home value, age, and interest rates.
• You are required to meet with a reverse mortgage counselor before obtaining the loan.

Cons of Reverse Mortgages For Seniors

These are not a free money program. Be sure you are aware of the negatives too.

• The loans can be very expensive transactions. Fees, closing costs, interest, and even private mortgage insurance (PMI) may have to be included in the loan balance. This reduces the amount of cash you can get.
• You must be 62 years old or older.
• The loan will reduce your home equity. When you sell your home, you (or your heirs) will get less money.
• You still have to pay for homeowners insurance, property taxes, and repairs. If you fail to meet these obligations, your home equity loan could be called in.
• The money could impact your qualification for Medicaid or supplemental social security.
• The loan must be paid off when the home is sold or when you (the borrower) can no longer live in the home. This can be a problem if other people, besides the borrowers, live in the home.
• A reverse mortgage can be more expensive and more binding than a home equity line of credit.

• You are required to meet with a reverse mortgage counselor before obtaining the loan. This may be more of a pro, actually!

Should You Consider a Reverse Mortgage

If you are struggling to subsist on your retirement income, a reverse mortgage is one alternative. Just be sure you do your research before you enter into any agreement this serious. The US Department of Housing and Urban Development (HUD) does provide counselors who do not benefit form these transactions.

What is Variable Life Insurance?

A variable life insurance policy is a permenent policy with distinct accounts for insurance vs. the cash value. There may be a variety of  investment choices, like  mutual, equity, or money market funds. The owner has the flexibility to choose how to allocate the cash value in these markets. When the cash value grows, because of dividends, interest, or market growth, the death benefit and value of the cash account can also grow!

What Are Senior Variable Life Insurance Rates? 

Since variable life, like other insurance, has rates and policies that are set at the local level, it is important to find good brokers and accurate quotes for your city or town. Find senior citizen variable life insurance agencies and rates here for free!

Pros and Cons of Variable Life Insurance

• The policy owner can participate in how well the cash account performs by moving investments between the fund options.
• When the funds do well, the death benefit can increase. Money in the cash account can also cover some of the premiums.
• Many life insurance events are not taxable. The fund can grow, beneficiaries can receive a death benefit, and the policy may eve be borrowed against without generating a new tax bill.
• There is risk.There may be periods when investments do not do well. The death benefit could be reduced and cash accounts could get depleted. Polices may have a minimum guaranteed threshold to minimize this risk.
• Since these are permanent policies, they may be used in senior life settlement transactions.

If you are interested in finding out more about variable life insurance policies for seniors, you can use our fast and free quote form to compare senior variable life rates and find local agents.  Insurers usually vary rates and policies by state, county, or zip code. That is why it is important to find a good insurance agent in your local area.

Define Burial Insurance Policies

A burial insurance policy for seniors (and sometimes middle aged people) is simply a relatively small whole life insurance policy. Insurers recognize the growing senior market, and also the fact that actuary tables tell them people can expect to live longer than they could a decade ago.  These whole life policies have been designed to be easy for older people to qualify for, and to apply for. 

Sometimes burial insurance is also called final expense or seniors life insurance. The policies are mostly intended to provide cash to pay for funerals, burials, and other end-of-life expenses.  Other expenses that might be anticipated are travel, medica bills, or making up for lost time at work.

Face values tend to range from a couple of thousand dollars to about twenty-five thousand dollars. Since average funerals in the US are estimated to cost about $8,000, many people choose to purchase a $10,000 policy. The amount you purchase really depends upon your needs and budget.

Simplified or Guaranteed Issue Burial Policies

There are a couple of different types of these, including simplified vs. guaranteed issue senior life. It is important to understand the difference so you choose the right one. A simplified issue policy will require a NO answer to a few health questions. Most seniors who can function on their own fairly well should quaify. A guaranteed issue policy will not require any health questions.

You may wonder how life insurance companies can issue insurance with no health underwriting. Well, they use a waiting period instead. For example, a guaranteed issue policy may not pay out any death benefit until the insured person has survived 24 – 36 months. Before that they may only refund premiums or pay a portion of the death benefit.

That is why it is important to compare policies before you purchase one. Sometimes simplified issue is cheaper, and it also provides an immediate full payout! For some people, who could not pass te health qualifications, a guaranteed issue policy may be the only option.

Who Buys Burial Insurance

Sometimes older people purchase these for themselves. They want to be sure that the policy beneficiaries will have cash to pay for a funeral and other things without having to borrow money. Other tmes, grown children actually purchase these for their parents because they are concerned about the high cost of funerals today.

How Much Does Final Expense Insurance Cost?

Your rates will depend upon a few things like the amount of coverage, the insurance company, age of the covered person, etc. To compare prices, it is pretty simple to use the form on this page:  Seniors Life Insurance

The form above is free, and you are under no obligation to purchase anything.

Compare Single Premium Life Insurance and Annuities

There are two popular products and financial advisors and insurance agents suggest for retirement. While they both come from insurance companies, and are similar in some ways, the differences are important. Are any of these products right for you? Which one is best? Let us look at single premium whole life (SPLI) and annuities to compare!

Immediate Retirement Fixed Annuities

• Funded with one lump sum payment.
• Give immediate income as specified in the contract terms.
• The death benefit will not usually be any more than the cash value of the annuity.
• Value may grow by a specified index rate or market index.
• Early Surrender Penalties and Possible Fees.
• Policy may have provisions to avoid penalties in some cases, like for a terminal illness or nursing home confinement.  

Single Premium Whole Life Insurance

• Funded by one lump sum.
• It usually provides an actual coverage amount that is many times the lump sum.
• Cash value may grow quickly, compared to other types of life insurance, because the coverage is funded up front.
• Surrender charges for an early cash out.  Some may have fees.
• The contract may have some provisions to avoid surrender charges in some cases (terminal illness or nursing home confinement).
• Potential to borrow against or cash out some time in the future.
• The cash value can grow by a fixed interest rate or market index.

So what is the difference between single premium life and annuities?

Well SPLI is mostly intended for wealth transfer to beneficiaries. You can turn an amount of cash into a death benefit that is usually a lot larger. Immediate annuities are usually intended to be used as a retirement income vehicle.

Now they both cross some lines. Annuities can have a death benefit to heirs, but will not be any larger than the cash value. SPLI leaves the face value to heirs like any life insurance. Annuities provide retirement income, but SPLI can be borrowed aganst or cashed out. But they are not intended, in the main, for these alternate uses.

So which one is best for you? You have to decide what you want. If you hae some money you do not need to live on, and you would like to be assured you can leave a larger cash estate to your kids, grand kids, or a favorite charity, SPLI may be for you. If you want a retirement income, consider an annuity.

Contracts differ, and you may find one or the other that gives you the best of both worlds. But before you do some shopping, it is best to think about your own personal situation, goals, and finances.

Would you like more information? We have found a couple of useful articles, and we posted them with links below.

Single Premium Life Insurance Explained

Immediate Annuities for Retirement Planning

Before you purchase any sort of retirement planning product, make sure you walk in knowing what your goals are. Then if you understand the basics of the products, you are in a good situation to make the right decision for you and your family!

Can Younger People Sell Life Insurance Policies (life settlements)?

Most of the time we hear about senior citizens selling life insurance policies for cash. This would mean a life settlement minimum age of 70, or sometimes down to age 60. But is this age carved in stone, or can younger people take advantage of this solution too?

Understand that when an investor purchases a policy they eventually want to get a return. It may seem sort of grim to talk about, but they do collect when the insured person passes away. In return, that insured person accepts a cash settlement of money they can use now, while they are still alive.

If they purchase a life insurance policy from a much younger person, it can be much harder for them to know how much money to offer. The fact is, the older a person is, the more accurate mortality predictions will be. It is hard to imagine how medical advances or some of the diseases of old age will affect the life span of a 30 year old. This makes it very tough to estimate the value of a policy while an insured person is still fairly young.

So while I have heard of cash settlments made for the life insurance policy of a 55 year old (rarely), I have not really heard of any 30 year old people selling policies. That does not mean it could not happen, especially if the health status of a younger person made it likely they would not survive into old age. And again, though it seems ghoulish to contemplate, a younger person with a serious health problem may be able to use the cash now for medical treatment, living expenses, etc.

Get life settlement quotes from a qualified company. An advisor will be able to answer your questions on a case by case basics. It is important for you to understand how these plans work, and if it is the right choice for you.

Fixed Annuities for Retirement – Safe Money Solutions?

I have been reading a lot of articles about retirement annuities, both by those who really like the products, and by other financial experts who are not fans. It is important to find the middle ground when researching fixed annuities, because many writers have biases. Those who like stocks, for instance, will be likely to highlight the disadvantages, while broker types will be bigger fans of fixed annuities.

Who Do Fixed Annuities Serve Best?

It will always be the premise of any articles I write that no one solution is the best answer for everybody. But you do have lots of choices. Here are some things to think about if you are considering annuities for retirement planning.

• Would You Like a Guaranteed Income?
• Will You Benefit from Tax Deferred Accumulation?
• Can you Commit to Putting Money Aside for Years?
• Would you be willing to sacrifice some upside for the guarantee of less risk?

So fixed retirement annuities tend to work well for people who can commit to leaving their money in the account. Most plans have penalties for early cashouts, unless it is for one of the reasons specified in the contract. Some examples of these exceptions to the penalty might be a severe illness or confinement to a nursing home. And the tax advantages may evaporate if you need to take your money out before retirement age.

But do not overlook the chance to guarantee that your money will not evaporate. In addition, the tax deferred accumulation can really help you grow savings.

Learn More About Retirement Annuities

This article is not really meant to discuss every detail of these types of savings.  You can find a lot more information online.

Visit Here: Explain Fixed Annuities or here: Free Online Annuity Quotes

Immediate vs Deferred Annuities

There are 2 ways to build your cash account. An immediate contract means that you deposit a lump sum, and payouts can start right away. Deferred contracts mean that the cash will grow over a period of years. Sometimes these are funded with a lump sum, but often they are funded with periodic contributions made over a period of years.

Why Are Fixed Annuities Safe?

They will either have a fixed payout, or they will be pegged to a market index. It is easy enough to understand a fixed payout of say, 6%. This amount will be returned in up market years and down market years. Equity indexed contracts, on the other hand, will have returns pegged to a major market index like the S&P500. In up years, the owner will earn  some percentage of the gains. In down years, the cash account is guaranteed not to lose money, and may even be guaranteed to have a small gain (i.e. 2 – 3%).

So annuities can be atractive when compared to lower paying bank savings accounts or riskier stocks. So what’s the catch? Well, again, you need to think in the long term. You often have to commit to keep your money locked up for several years. You can find a variety of terms from a few years, to over a decade though. Of course, the longer you will commit your money, the more favorable terms you will get.

Who Sells Annuities?

Fixed annuity products come from insurance companies. Indeed, they combine features of investments with other features of insurance. For instance, if you choose a contract with a guaranteed payout of 10 years or a lfetime, that may come from an insurance feature, or the cash value of your account.

Can you Get Paid Cash for Life Insurance Policies with a Life Settlement?

Life settlements are growing in popularity. Most of the time an investor will pay cash for a permmanent life insurance policy. They hope to pay less than the face value of the policy, and make a profit when the insured person does pass away. In return, the insured person (or company) will get paid now, rather than have to wait for a death. This can benefit some companies, with unwanted key man or business owners policies, and it can also benefit seniors who may find better uses for money while they are alive.

In the old days, people would just let a life insurance policy lapse by not paying the premiums, or they would surrender it back to the insurer for the cash value. The cash value is usually very small in comparison to the death benefit (face value) of the policy. This gives people another option.

What Policies Can Be Sold?

Of course, this varies, but here are some general guidelines.

• Investors are usually looking for an older person. Some set the minimum age at 70, though some will accept younger people.
• This policy must be whole life, universal life, or term life with an option to convert to a permanent policy. The term policy must have some time left on the contract.

Is this a Good Idea?

On the surface, the whole thing may sound a bit ghoulish. But if an older person has an unwanted policy, or the need for money now outweighs the need for money later, this can work out to the benefit of the insured person. Many beneficiaries of the policy, being close heirs to the older person, are actually relieved that they can find a solution to help out mom or dad with money while they are still alive.

How to Sell A Life Insurance Policy

If you are interested in getting more information, you need to find a life settlement broker or company. This is usually a life insurance agent who has been certified to handle this type of transaction, though a regular agent may help you find the right person to talk to.

Online Life Settlement Solutions

Visit here: Senior Life Settlement Quotes

Is Life Insurance For Older People?

Many people associate life insurance with term products purchased for young and growing families. Certainly, those types of younger parents with kids and a mortgage would want to consider protecting their future in case one breadwinner dies. But many of us did not outgrown our need for a policy just because our children are older, our mortgage is getting paid off, and we celebrated a few more happy birthdays.

What are Some Reasons That Seniors Need Policies?

People in middle age, and even typical retirement age, are still a very active group these days. In fact, we have some good news about increased life spans, and also, increased productive life spans. As long as people still have productive work to do and obligations to handle, there is still time to consider making sure that lives are covered.

Many seniors need life insurance.

We also have more good news. Because Americans are living longer, than they were even a decade ago, top insurers are more willing to extend affordable policies to these people.

• Business owners and key men (top professionals in their company) are very important to their enterprise. Many companies insure those people’s lives, and in fact, may need to in order to obtain business financing. I have seen many examples of small, medium sized, or large companies that needed to insure older people in order to protect themselves, and possibly a lender.
• Seniors with less assets may just want to purchase a smaller plan in order to make sure that their heirs have no trouble coming up with cash to handle expenses after they pass away. Examples of these expenses could be funerals, travel, and settling debts.
• Life insurance policies do not usually get taxed, so this can be a good way to transfer wealth to the next generation. This also works for business owners, who will not have all of his or her heirs inherit a company. The other beneficiaries can get a cash settlement from insurance.

Find Policies at Older Ages

So you can see that there are many reasons for older people to purchase policies. We can help you find more information.

CLICK HERE: life insurance quotes for older people.