Long-term care is a pressing issue that affects millions of people in the United States.
With the median cost of a private room in a nursing home being over $100,000 per year, many seniors are faced with the challenge of how to pay for their long-term care needs.
This financial burden can be particularly difficult for those who have limited income or savings. However, there is a little-known strategy that can help seniors unlock hidden value in their life insurance policies to fund their long-term care: selling their policy through a life settlement. With 70% of people turning age 65 expected to use some form of long-term care during their lives, it’s important to understand how selling a life insurance policy can help seniors pay for their future care needs.
How selling a life insurance policy to pay for LTC works:
- Determine eligibility: The first step is to determine if you are eligible to sell your life insurance policy through a life settlement company. Generally, you need to be over a certain age (typically 65), have a life insurance policy with a death benefit of at least $100,000. Overall health can also play a factor in eligibility.
- Pick a broker or provider: Once you determine your eligibility, you will need to decide if working with a broker or a provider who can appraise your life insurance policy. Although providers (direct buyers) can settle transactions faster, they are not fiduciaries. A life settlement broker is a licensed fiduciary who works in the best interest of the client. Brokers save time by completing one application that is presented to multiple buyers to achieve the highest offers. Brokers ensure clients are treated fairly and only get paid a commission if a seller accepts an offer. With a provider, you may never really know if you got a fair offer.
- Get a policy appraisal: The life settlement provider or broker will evaluate your policy to determine its value or market value. This process takes into account factors such as your age, health status, and the size of the death benefit. Based on this evaluation, the provider will offer you a lump sum cash payout in exchange for your policy. A broker will position your policy in an auction-like format and negotiate on your behalf while presenting your offers.
- Use the proceeds to fund long-term care insurance: If you decide to accept the offer, you will receive the cash payout from the life settlement provider. You can then use this money to purchase a long-term care insurance policy (through a state-licensed, long term care (LTC) health insurance agent) that will help cover the cost of any future long-term care needs you may have. Note: LTC funding may be a tax-favored event. Talk with your tax professional to learn more.
Taking Care of Long Term Care
When it comes to long-term care, having a plan in place is essential. Unfortunately, many people are unprepared for the financial burden that long-term care can place on themselves and their families. The statistic that unpaid family caregivers provide an estimated 90% of the long-term care in the United States is a powerful reminder of the toll that caregiving can take on loved ones. However, selling a life insurance policy can provide a way to fund long-term care needs and alleviate some of the financial burden on family members. By unlocking the hidden value in their life insurance policy, seniors can gain the peace of mind that comes with knowing they can afford the care they need. In the end, selling a life insurance policy to pay for long-term care insurance should always be considered as a viable option for seniors looking to secure their future and protect their loved ones from the high cost of long-term care.
A Short LTC Story
Mrs. Thompson had always been a source of strength for her family. So when she started needing long-term care, her family was determined to find a way to pay for it without burdening her loved ones. They discovered that they could sell her life insurance policy for a lump sum and use the proceeds to fund her long-term care needs. Thanks to this little-known strategy, Mrs. Thompson was able to receive the care she needed without worrying about the cost, and her family was able to focus on spending time with her and enjoying their precious moments together. In the end, the decision to sell her life insurance policy was a gift of love that helped the family treasure the time they had left with Mrs. Thompson.
These statistics highlight the importance of planning for long-term care needs, including the potential financial burden that it can place on individuals and families.
- 70% of people turning age 65 can expect to use some form of long-term care during their lives. (U.S. Department of Health and Human Services, “Long-Term Services and Supports for Older Americans: Risks and Financing Research Brief, October 2016)
- The median cost of a private room in a nursing home is over $100,000 per year in the United States. ( Genworth Financial, “Cost of Care Survey 2021)
- Unpaid family caregivers provide an estimated 90% of the long-term care in the United States. (AARP Public Policy Institute and the National Alliance for Caregiving, “Caregiving in the U.S. 2020, PDF)
Are you a senior looking for a way to maximize the value of your life insurance policy and fund your long-term care needs? Look no further than Bridge, a licensed life settlement and viatical settlement brokerage with a mission to help American seniors increase their wealth. As fiduciaries, our goal is to save you time and streamline your application process by connecting you with top buyers and negotiating the highest settlement guaranteed. With our help, you can unlock the hidden value in your life insurance policy and gain the financial flexibility to pay for your long-term care needs. So why wait? Just ask us how we can help you today!
Note: It’s important to note that there are potential downsides to selling your life insurance policy, such as losing the death benefit and potentially paying taxes on the cash payout. It’s important to carefully consider your options and consult with a financial professional before making any decisions.