Americans over the age of 65 are carrying more mortgage debt and have accumulated less home equity than seniors a decade earlier, according to a report by the Consumer Financial Protection Bureau.
From 2000 to 2011, the number of senior homeowners with mortgages increased from 22 percent to 30 percent. And during that same time, median mortgage debt for older homeowners increased 82 percent to $79,000.
Owning a home into the senior years has been an American tradition, providing a comfortable place to live and a source of financial well-being. But as housing becomes a greater burden on older individuals, this trusted asset may no longer offer the security it did in the past.
While delinquencies and foreclosures have decreased since 2012, the CFPB has stated that foreclosure is still a big problem for older homeowners. They have a harder time making their mortgage payments since they may also have health problems, cognitive issues, and are most likely not working.
Another traditional asset, life insurance, may help some seniors who are having difficulty with their mortgage. Premiums are often paid for years – even decades – usually with the intention of taking care of loved ones, but now important facts about life insurance benefits are causing policy holders to take another look. Nearly 88% of universal life insurance policies issued in the U.S. never result in payment of a claim, according to Milliman USA. This is because policy owners either stop making the expensive payments or cancel their life insurance because it no longer meets their needs. However, selling their life insurance policies in the secondary market can help pay for current expenses, like home mortgages.
Selling a life insurance policy can provide a lump sum greater than the policy’s surrender value but less than the total face value. When sold to a licensed provider like GWG Life, LLC, the insured receives the fair market value for the policy. This option frees the policy owner from burdensome premiums and provides a cash payment to fund current needs.
For seniors who are struggling to pay their mortgages, selling a life insurance policy in the secondary market can help them stay in their homes longer, pay off their loans now, or be the source of funds to update their home in preparation for a sale. For more information, click here.