Reverse Mortgages and Long-Term Care - A Marriage Made in Heaven (So Why Hasn't It Happened Yet?)
For many years now, some might even say decades, reverse mortgages and the long-term care industry have been touted as the two industries that could do the most good for the senior generation (for the sake of this article, we are defining seniors as 55 and above.)
Most experts agree that the cost involved in securing Long-Term Care Insurance is the #1 obstacle some must deal with. But wait! If you are 55 years old or above, we can now use a reverse mortgage to eliminate your present mortgage payment, and presto, changeo! Many middle-income Americans can now afford the same in-home care services and Long-Term Care Insurance as the wealthy, or at least those with more savings and income.
Or, if your home has no mortgage, you can secure a reverse line of credit to pay for in-home care if you need it now or purchase that policy!
Literally millions of seniors are presented with an option to purchase a product that they have long thought is beyond them financially. Are you kidding me?
This is incredible! Where do I sign!!!
Well, as much as this looks, sounds, and acts like a marriage made in heaven, these two industries have been, let's say … casually dating for the last 20 years. Neither one seems to want to consummate the relationship.
But why?
Being on the reverse mortgage side, I can tell you why. No product, not even Long-Term Care Insurance, has been surrounded by more misinformation and half-truths than the reverse mortgage.
Despite the passage of time, a significant portion of the financial sector, many consumers, and a large part of the insurance industry continue to ponder the same inquiry.
Question: When you take out a reverse mortgage, does the lender truly become the owner of your home?
No, they don't! Only the owner's name is on the deed and title.
Question: Doesn't the lender take the house when the client dies?
Actually, that's not the case! The ownership of the home is determined by the directions set forth by the clients in their will or trust.
Question: Doesn't the surviving borrower have to move out when the first borrower dies?
No, they continue to live in the home without the need to make monthly principal and interest payments for as long as they stay in the home.
I could go on, but the list of misinformation is very long, and we will save that for my next article.
Let's also delve into the issue of in-home care, a subject that holds great sensitivity for countless families across our country at this moment. Similar to the rising expenses of medical procedures and medications, the price of in-home care services has surged dramatically in the past ten years.
From this writer's perspective, deciding when to introduce outside assistance into the home is the most emotionally charged yet crucial choice to be made. Like many decisions at this stage in a senior's life, it could significantly impact other family members as well.
Who is Taking Care of Mom or Dad?
In numerous instances and across many families, one or more children often take pride in "stepping up" to care for their mother or father. "We don't need outside help! I want to take care of Dad!" (or Mom) is a common sentiment expressed.
I was one of those sons 19 years ago. My father and I were practically inseparable from when I was very young until the day he left us, in his room in my home surrounded by his children and grandchildren. I was Dad's primary caregiver for the last year of his life. And damn, I was so proud to be doing it. Until one evening, when I was helping him through a particularly rough night, he looked at me and said, "You shouldn't be doing this; it's not right."
And then I realized it, he didn't want me to be his caregiver in the last segment of his life; he wanted me to be his son … It's a thought that still brings tears to my eyes to this day.
The next day, we arranged for in-home care, and the quality of both our lives increased dramatically.
Dad and I spent our time laughing and sharing memories without him having to feel the guilt/embarrassment of his son "taking care of him."
You can search for quality home care providers and long-term care facilities by using the LTC NEWS Caregiver Directory. There are over 80,000 listings nationwide, and the directory is free to use.
The extensive and profound impacts on family caregivers are an incredible subject, far more widespread than one might initially think. The question then becomes, when will these two sectors (long-term care and reverse mortgages) cease to be influenced by the surrounding misinformation and take the significant leap to offer these solutions broadly to the public?
Now, there is a very silver lining to this grey cloud.
Although no formal relationships currently exist between major in-home care providers, Long-Term Care Insurance carriers, and national reverse mortgage companies, there is nothing stopping the informed consumer from taking advantage of this opportunity.
These options exist! And you can make it happen.
Prepared for the Consequences of Aging?
So now the question becomes, why could being prepared for the retirement segment of your life be the most important plan you and your family have ever made?
Longer life spans have become the sharpest double-edged sword to face America in decades.
The answer to this question hinges on a singular, critical factor: thanks to ongoing advancements in medical and scientific research, increased life expectancy has emerged as the most profound double-edged sword confronting America in recent decades.
(Another topic for one of my future articles)
Let's think about this: when I was a child, I had chicken pox and measles, but I'm very happy to say I never had the mumps (what a weird name for a disease.)
My children received vaccinations for these diseases. My grandchildren have never heard of them and will never have them (and no, I'm not 100 years old!)
Most forms of cancer, if discovered at an early enough stage, are curable. Major organ transplants, heart catheterization, and cornea implants are now common procedures.
However, one certainty remains: all these procedures carry a high cost, which only continues to rise annually. And we all know without the proper coverage and services, these expenses can cripple most Americans financially.
Good News = Longevity - Bad News = Longevity
And there it is, the double-edged sword of longer life spans. It really is a conundrum for all of mankind, if there ever was one. But let's face it, as conundrums go, this is a great one to have!
Yes, we are going to live longer and longer. Yes, many of us will be making incredible memories with our children and grandchildren, and yes, some of us with great-grandchildren.
So, what is the moral of the story?
Do we enjoy life while we can and just wait for the inevitable? I think not!
Like every other obstacle we have all overcome throughout our long lives, we make a plan. We devise what is needed to make that plan work. And then we live our lives to the fullest.
In this case our plan must allow us to live the next 20-30 years of our lives and be as prepared as we possibly can for what we absolutely know is ahead of us.
Until the corporate world catches up, it is up to us to protect ourselves. And as I said above, the options are available.
Take care. If you are a consumer, be sure to seek help from a qualified Long-Term Care Insurance specialist and an experienced expert in reverse mortgages.
If you work in those industries, our goal is simple -- let's help every senior we know have the highest quality of life possible.