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Because one is not making payments the loan balance increases over time, increasing the Principal Limit (loan amount),or the amount one is borrowing more over time. In essence you are borrowing the interest and FHA Mortgage Insurance Premium each month. On conventional loans these are being paid with each payment made reducing the Principal Limit over time. The actuarial table for the Principal Limit on a reverse mortgage is based on the the borrower's age to age 100. The reason the younger borrowers receive less is because their life expectancy is longer and their loan balance over time is likely to be higher.
Borrowers DO NOT LOSE their home with a reverse mortgage, it is a mortgage like any mortgage with special terms for seniors, allowing one to USE THE EQUITY for whatever they need or want. One of the biggest advantages, as Peter points out, one is not required to make monthly mortgage payments, lease or rent payments freeing up one's cash flow for their retirement years. And with the reverse mortgage you still own your home and have control.
I do encourage you to look at all options and the pros and cons for each (http://wp.me/pxPEm-nC). Selling and leasing is an option to be considered however keep in mind with a lease you are selling your home and leasing it back which means the lease holder then has control of your property and can choose to not continue the lease, sell or run into financial difficulties and go into foreclosure, forcing you to move.
Talking with a financial advisor and/or elder law attorney knowledgeable about reverse mortgages are always advisable. I'd also suggest working with a reverse mortgage broker who works with several lenders and one that is local and meets with you in person to review all your options. Your advisors should also be allowed to participate in these meetings.
Beth Paterson, NMLS #342859
Reverse Mortgages SIDAC #173899