How to Afford a Vacation Home with a Life Settlement

If you've reached retirement age you may be wondering how to afford your dream vacation home, and how did life get so expensive?  

While there a number of ways in which one can afford a 2nd home, and we'll explore those in a minute, one asset seniors often don't realize they have is their life insurance policy.  People aged 70 and older who own a life insurance policy have the opportunity to sell their policy to a 3rd party investor.  The investor group pays a cash settlement now, while taking over ownership of the contract, paying future premiums and eventually collecting the death benefit upon maturity.  Settlement amounts can range from a few thousand dollars to a few hundred thousand dollars depending on your unique case. 

To find out how much you might be able to get for your policy, fill out the free appraisal form on this page with no obligation to apply.  

how to afford vacation home

Perhaps you took out a life insurance policy some time ago hoping to protect your spouse or children in case something happened, but now that you're older the need for the coverage isn't exactly as pressing as it once was.  Not to mention the ongoing premiums, some of which increase with age, are taking a toll on your budget, and may become unaffordable.  The policy will lapse when you reach that premium payment you just can't afford anymore.

Unless you really need that insurance coverage, it would be worth it to at least find out if selling it might help you to afford that dream vacation home that you can leave to your heirs.  

Other ways people afford a vacation home is by renting it. Popular sites like AirBnB and VRBO make vacation rentals fairly easy to list and manage on your own.  Depending on the accessibility and desirability of your vacation home, you may actually net a profit renting out your vacation home.

Some folks prefer not to get as involved, and leave the property managing up to a property management company who fields complaints from guests, fixes things, changes the linens and cleans between each guest.  

If you want to retain a certain quality control while also retaining more of the rental income, you can manage these things yourself by hiring local cleaning agencies.  With the age of the internet, you can even program the front door lock with a keypad so guests can receive a unique pin to enter the home without having to worry about losing a key.  

I'd also recommend finding a local handyman you can call on should something break.  It can be incredibly frustrating when something simple breaks like a screen door or faucet when all you need is some basic tools to fix it.   If you can't be there in a jiff, a handyman is usually happy to help for a small fee.  

Lastly, when pricing your rental, make sure you are competitive with your rates.  The price is the first thing people will see, and nearly everyone will book the comparable unit that's priced just a little lower.

Owning a vacation home is certainly within reason for many people, and may even generate income.  If you're trying to figure out how to scrap together a down payment, consider selling your life insurance policy.  And depending on your case, perhaps you'll receive enough in the settlement to buy the property outright and fix it up the way you want.

I hope this information was helpful.  To find out what your policy might be worth to an investor, give us a call at 213.784.1481, or fill out the appraisal request on this page and we'll get back to you shortly.