Long-term care (LTC) is an expensive proposition, and certain LTC services could be too expensive for those living in the “economic middle.” However, there could be options for financing LTC, however, as long as the potential financial impacts are considered. And, one such option could be a reverse mortgage, according to a recent NerdWallet column.
“What most people do, especially in a situation like a long-term care issue — once they’re out of the house, you sell it and use the proceeds to pay it off,” Nicholas Bunio, a certified financial planner, told the publication.
However, there are other factors to consider with a reverse mortgage, according to the column.
“[C]losing costs are expensive, similar to taking out a traditional mortgage, and you’ll leave less to heirs,” the column states. “[B]ut if you’re planning to receive home care or there’s a spouse still at home, it can be a solid option. (Once there’s no one living in the home for a year or more, the home must be sold to pay back the loan.)”
In addition to reverse mortgages, it may be worth considering the insurance options, presuming the person has no major underlying health issues that would adversely impact their eligibility or ability to pay for the coverage.
“Although experts recommend purchasing by age 65, you may be insurable up to age 79,” the column states. “Premiums can be pricey, but note that a semiprivate room in a nursing home costs more than $94,000 per year, according to the 2021 Cost of Care Survey by Genworth, an insurance company.”
Jason Parker, a financial planner and reverse mortgage professional, recently recommended in his commentary for RMD that originators maintain an up-to-date understanding of the LTC marketplace.
“This is the most natural situation advisors will consider mentioning as an option, so you need to know what you’re talking about to be taken seriously,” Parker said. “Learn real-life LTC underwriting and care stories, know the activities of daily living (including the precursor health conditions related to them), and understand the full spectrum of solutions in the market that the advisor may recommend.”
