Matt Seidholz, a freelance healthcare content writer and journalist from Brooklyn, experienced the devastating impact of foreclosure firsthand when his family lost their home. This traumatic event motivated him to make a wise financial decision that many young people often neglect—purchasing life insurance.
While life insurance may not be a top priority for some until later in life, Seidholz believes its financial benefits make it a valuable investment at any age. "I'm in my 30s. Married, but no kids. Until recently, I figured I had plenty of time to sock away some funds to cushion the blow if anything should happen to me. Why would I need life insurance?" Seidholz noted.
Like many young men, Seidholz focused on maximising his earnings, saving as much as possible, and contributing to his retirement accounts. He would have continued this path indefinitely—until the day his mom lost her house.
A Night of Shock: The Foreclosure
A shocking discovery awaited Matt Seidholz's mother and stepfather one October evening: upon returning home from dinner, they found their locks had been changed and a large "FORECLOSURE NOTICE" displayed prominently on their front door.
Seidholz's mother was utterly confused by the situation. The house was in his stepfather's name, and he always seemed to be making regular mortgage payments—or so she thought. Conversations with the bank revealed a shocking truth: his stepfather hadn't made a single payment in over three years. He had ignored phone calls, dismissed warnings, and never informed her of any issues.
As Seidholz's mother investigated her husband's finances further, her confusion deepened. He was a successful business owner, and their combined monthly income should have easily covered the mortgage. They had enough savings to pay off the remaining balance entirely.
So, why were they suddenly homeless? Why hadn't he been making those payments? A neurologist gave the answers, not an accountant or a lawyer.
Following an MRI, the neurologist informed them that Matt's stepfather wasn't intentionally neglecting his financial responsibilities. He had no hidden agenda or conflict with the bank. Instead, he had frontotemporal dementia (FTD), a degenerative brain disease that severely affected his cognitive abilities.
Seidholz's stepfather simply forgot to make the payments repeatedly for years. For Seidholz's mother, this diagnosis was heartbreaking. It also signalled the start of significant financial challenges. Losing their home was just the beginning of the financial difficulties ahead.
A spouse with dementia is a financial ticking time bomb. FTD is a debilitating condition with no cure. Patients experience unpredictable cognitive decline, and there's no way to anticipate which problems will arise.
The only certainty for Seidholz's mother is that, eventually, his stepfather will require 24/7 care in a nursing home. In her area, that care costs approximately $8,000 per month, and he may need it for years.
"That math looks grim, and it would look a whole lot worse if my stepfather didn't have a $1.5 million term life insurance policy," Seidholz explains.
Life Insurance: A Crucial Financial Lifeline
Despite Seidholz's stepfather forgetting about the mortgage payments, the life insurance premiums continued through autopay, maintaining the policy in good standing even after his diagnosis. While his mother couldn't claim the policy while her husband was still alive, it still offered a significant financial benefit.
Seidholz's mother's financial advisor, Roger Deal, a CPA at Sequoia Wealth Partners in Omaha, Nebraska, pointed out that her large life insurance policy provided her with multiple options. The first option was selling the policy to another insurance company for a portion of its worth.
"This usually isn't a great option for people," Roger told Seidholz. "The buyer company is going to look over your case with a fine-tooth comb. They'll have their own medical people, and they'll come to a new decision about the insured person's insurability." In most cases, selling the policy would result in a lowball offer, even for a generous plan.
The second option, which was more appealing to Seidholz's mother, was to use the life insurance policy as collateral to secure a bank loan. "Banks aren't going to look at insurability at all. All they care about is recouping their loan," Roger explained.
They'll need proof that the policy is real and that the insurer is in good financial standing. That's it," he added. With her husband's life insurance policy, Seidholz's mother and her financial advisor, Roger Deal, approached a local bank and successfully secured much-needed funds to help cover long-term care costs.
This financial relief gave her a much-needed break. While the progression of her husband's disease remains uncertain, she now has the resources to ensure he receives the care he will eventually need.
How His Mother's Experience Shaped His Life Insurance Decision
The ordeal with Seidholz's stepfather was a wake-up call. Before, life insurance had seemed somewhat morbid to him, as if it was acknowledging the unsettling idea of being worth more dead than alive, much like George Bailey in "It's a Wonderful Life."
However, this experience made him reassess the importance of financial security and prompted him to take out a policy for himself. But Seidholz's mother's experience helped him appreciate the true value of life insurance as an asset. He couldn't imagine where she would be without it, a thought that unsettled him.
He also realised that if he were ever diagnosed with dementia or another severe disability, he would never want his wife to bear the financial and emotional weight of his care.
So, he purchased a 20-year, $500,000 term life policy. According to Business Insider, the annual payment of about $340 (which is about $28 a month) is a small price to pay for the peace of mind it gives him.
"Frontotemporal dementia is exceedingly rare. But all the same, it's good to know that if it should happen to me, my wife will have options to deal with it," Seidholz admitted.
Seidholz's journey underscores the value of life insurance as a financial security tool. Survivorship Life Insurance is another option for couples, covering two individuals under one policy. This could ensure long-term stability for both partners, providing peace of mind in case of life's unexpected twists.
