Life Settlements, Viaticals and Long Term Care Benefit Plans

Many seniors over the age of 65 will eventually require some type of long term care. The need for long term care is usually due to a severe or chronic illness that requires both medical treatment and help with daily living. Paying for long term care can become a significant financial burden for an elder and his or her family – from $40,000 up to $100,000 a year depending on the type of care that is needed.

One way long term care can be financed is by converting a life insurance policy into a life settlement, viatical settlement or Long Term Care Benefit Plan.

Using Life Insurance to Pay for Long Term Care

Most insurance companies will buy back a policy if the policyholder decides it is no longer needed or can no longer afford the premiums. However, the amount of money the insurance company will pay (cash surrender value) is only a small percentage of the policy’s actual worth.

Another option is selling the life insurance policy to a third party. This is often the best way to recover the most amount of money from the policy and any premiums that have been paid to date.

Selling a Life Insurance Policy to a Third Party

When a life insurance policy is sold to a third party, it is called a life settlement. Until recently, life settlements were primarily for high net worth individuals with a death benefit above $1 million. In addition to age restrictions, only certain types of policies were accepted.
The paperwork needed for a life settlement includes 5 years of medical records and can take as long as 6 months to complete. Life settlement lump sum payments average around 15% of the death benefit. The money received in a life settlement is also taxable.

During the peak of the AIDs crisis in the 1980s, a new type of life settlement, called viatical settlements, become popular. At the time, viatical settlements were primarily for individuals with a terminal illness and life expectancy of 2 years or less. Today you will find some life settlement companies offering viaticals to individuals with chronic health conditions or a terminal illness with a life expectancy of up to five years. Although the federal government does not tax the money, some states may still require tax payments.

Converting a Policy to a Long Term Care Benefit Plan

The best way to pay for long term care is with a third type of life settlement, called a Long Term Care Benefit Plan. Not only is the settlement tax-free, there are no age minimums or health restrictions.

Several different types of polices can be converted to a Long Term Care Benefit Plan, including Term Life, Whole Life, Universal Life and Group. Policies can have a face value as low as $50,000. The average payout for a Long Term Care Benefit Plan is 4 to 5 times greater than any other type of life settlement – usually around 30% to 60% of the policy’s face value. The settlement process can also be completed in as little as 30 days with a minimal amount of paperwork. Money from the settlement is deposited into an irrevocable Benefit Account which is professionally managed. Medical and personal care expenses are paid from this account.

If you or a family member need long term care, including home care, assisted living, nursing home care or hospice care, converting an-force life insurance policy to a Long Term Care Benefit Plan can reduce financial worries and ensure the highest quality of care possible.

Elder Care Funding helps individuals and families find solutions to long term care financing. Complete the form below to find out if you are eligible for a Long Term Care Benefit Plan, or give us a call at 844-814-6511.

Viatical Settlements vs. Long Term Care Benefit Plans

When a senior is terminally ill, family members can end up struggling to cover the costs of their loved one’s medical expenses and personal care. One way senior care can be financed is by selling a life insurance policy to a third party, also called a life settlement. Viatical settlements, a type of life settlement, are for individuals with a life expectancy of less than two years. A Long Term Benefit Care plan is another kind of life settlement with less restrictions and a faster processing time.

How Viatical Settlements Work

Viaticals (derived from Latin viaitcus “relating to a journey” and Late Latin viaticum “travelling provisions”) are a type of life settlement that grew in popularity during the late 1980s at the height of the AIDS crisis. At the time, although most AIDS patients had very little cash to pay for their treatment and living expenses, many of them had insurance policies.

Once the insurance policy has been sold, the buyer is responsible for all future premium payments. The third party also becomes the policy’s beneficiary – the recipient of benefits after death. Viatical funding companies are usually backed by financial institutions or investors. The money they earn from the settlement comes when the death benefit is paid.

The Advantages of Long Term Care Benefit Plans

When a life insurance policy is converted into a Long Term Care Benefit Plan (LTCBP), the money is deposited into a Benefit Account. More types of policies will qualify for a Long Term Care Benefit Plan than a viatical settlement and the size of the policy can be as low as $50,000.  Processing time is usually between 30 and 45 days, much shorter than a viatical settlement.  Unlike a viatical settlement, all health conditions are accepted – you do not need to be chronically or terminally  ill to qualify for a LTCBP.

Are you counting on Medicare or Medicaid?

People who are seriously ill often mistakenly believe that government programs such as Medicare and Medicaid will cover their long term care costs. Medicare for individuals 65 years of age or older only covers short term conditions where the patients health is expected to improve. If the patient needs a nurse at home or in a facility, Medicare will only pay part of the costs for a limited amount of time. Medicaid on the other hand, does cover long term care. However, Medicaid also requires that the patient’s financial resources be depleted in order instagram online viewer private to qualify for coverage. In most cases, existing life insurance policies will be considered an asset and disqualify the person from receiving Medicaid.

A large percentage of seniors will end up allowing their policy to lapse, receiving no compensation or benefits after years of paying premiums. Many policies are also surrendered for a significantly reduced cash payment.

If you or a family member are seriously ill, a Long Term Care Benefit Plan may be your best option when it comes to coverage for medical and personal care expenses. Not only will you receive the lump sum settlement payment in a relatively short amount of time, you’ll be able to generate the cash you need for quality care while protecting your assets.

Elder Care Funding is a long term care solution provider. You can check your eligibility for a Long Term Care Benefit Plan below, or call 1-844-814-6511 for more information.