Taking out a Reverse Mortgage to Buy Life Insurance
There are many reasons to consider a reverse mortgage. Individuals over the age of 62 interested in purchasing a life insurance policy might want to consider a reverse mortgage to fund the premium.
The Reverse Mortgage Solution
Reverse mortgages do not require repayment for as long as an individual is able to live in their home. This means the life insurance policy’s premium can be paid without drawing from cash reserves or monthly income.
Proceeds from a reverse mortgage are not taxed as income. This means that you would actually be purchasing the life insurance coverage with tax-free money which lowers your effective cost.
In addition, because a reverse mortgage creates a lien that must be paid upon death, the value of your property subject to estate tax is lowered. This could result in a lower overall tax bill for your heirs.
Finally, life insurance payouts leave an exact, guaranteed sum to your heirs. Their inheritance is no longer dependant on the stock market, tax rates, or real estate prices.
Because of the closing costs involved, taking out a reverse mortgage can be an expensive way to purchase life insurance. If other savings or income is available, it is a good idea to consider using it instead. It is always advisable to first visit a licensed financial planner.
Proceeds from a reverse mortgage are not taxed as income. This means that you would actually be purchasing the life insurance coverage with tax-free money which lowers your effective cost.
In addition, because a reverse mortgage creates a lien that must be paid upon death, the value of your property subject to estate tax is lowered. This could result in a lower overall tax bill for your heirs.
Finally, life insurance payouts leave an exact, guaranteed sum to your heirs. Their inheritance is no longer dependant on the stock market, tax rates, or real estate prices.
Because of the closing costs involved, taking out a reverse mortgage can be an expensive way to purchase life insurance. If other savings or income is available, it is a good idea to consider using it instead. It is always advisable to first visit a licensed financial planner.
Life Insurance Without Losing Retirement Savings
Consider the situation of Charles Osborne, a 63 year old business in Florida. He used took half of his monthly reverse mortgage payment and purchased an A+ rated life insurance policy from Genworth financial. Mr. Osborne wanted the piece of mind that his relatives would be taken care of if something were to happen to him. Being a small-business owner, he did not want to give up the piece of mind that his savings provide. By using a reverse mortgage to purchase the policy, Mr. Osborne was able to provide security without sacrificing his savings.
When used correctly and with guidance from a licensed financial planner, a reverse mortgage can help you sensibly leave money to your heirs without sacrificing your current standard of living.
To review reverse mortgage options and see which program makes the most sense for you, visit Grindstone United’s Best Deal Comparison Tool or call 866-508-HECM.
When used correctly and with guidance from a licensed financial planner, a reverse mortgage can help you sensibly leave money to your heirs without sacrificing your current standard of living.
To review reverse mortgage options and see which program makes the most sense for you, visit Grindstone United’s Best Deal Comparison Tool or call 866-508-HECM.