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For Seniors, Creative Financing Catches On
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Added: 06/20/2006
Type: Summary
Viewed: 225 time(s)
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For Seniors, Creative Financing Catches On
As the number of seniors taking advantage of new financing options escalates, companies providing "reverse mortgages" and "life settlements" are enjoying unprecedented growth in demand for their services. For thousands of seniors who have paid off their home mortgages and find themselves asset rich but cash poor, reverse mortgages are translating into tax-free monthly "pension" checks, providing a source of capital to help finance eldercare services like homecare and other necessities.
Though seniors have traditionally been hesitant to borrow against their precious home equity to supplement income, in 2003, the number of seniors who obtained reverse mortgages increased 70%. In 2005, lenders originated a record 43,000 Home Equity Conversion Mortgages – a five-fold increase from 2001. Growth of both reverse mortgages along with life settlements - which allow a life insurance policy owner to sell an existing policy to a financial institution in exchange for an immediate lump sum cash settlement – are expected to continue.
"Financing eldercare is certainly one of the drivers for the explosive growth in the numbers of those accessing these financing vehicles," said Robert F. Brooks, CEO of ElderCarelink, a company that connects consumers seeking eldercare products and services with providers. Significant percentages of ElderCarelink survey participants express interest in reverse mortgages and life settlements, and steady demand for long term care planning assistance continues. Eldercare services are a common need for seniors, so funds from these financing arrangements are often used to cover such things as homecare and other support services. In addition, seniors can also use these funds for home renovations, prescriptions, even travel.
Brooks said he expects more creative financing programs to proliferate in the coming years as a consequence of our aging population coupled with that segment’s ever increasing demand for long-term care services. "While some seniors who are lucky enough to have the assets can take advantage of reverse mortgages or life settlements, not everyone has those options. As people live longer, the care they will require to support their daily living requirements will increase, thereby placing tremendous strain on government programs as seniors exhaust assets and then turn to programs like Medicaid for coverage," he said. "Programs which provide cost-effective care alternatives and/or incentives to individuals to set aside dollars for future long-term-care requirements," he said, "will likely emerge."
About ElderCarelink
ElderCarelink, a leading provider of qualified lead generation services within the eldercare industry, assists families in finding a multitude of senior services, including assisted living, nursing homes, adult day care, private duty nursing, care management and homecare in all 50 states. |
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