Preparing for a future including long term care is a necessity for us all, even if it’s something we don’t like to think about. About 70% of adults who reach age 65 will require some long-term care service or support in their lifetime, according to a study from the Urban Institute and the U.S. Department of Health and Human Services. Whether it’s assistance with dressing and eating or more involved care, it’s a fact of life we must be financially prepared for.
The truth is that long term care options cost more than most Americans expect and they’re getting more expensive each day. The average monthly cost for an assisted living facility in 2021 was $4,500, and almost double that amount for a private room in a nursing home. When you add in the cost of premiums from life insurance, your finances can quickly get out of hand.
If these amounts sound like more than you’d planned for, you’re not alone. Luckily, you may have the option to sell your life insurance policy should you need it. Through a transaction called a life settlement, you could generate the funds necessary to cover your long term care needs.
Life Settlements: The Basics
A life settlement is the sale of your life insurance policy to a third party in exchange for a cash payment. We often see these sales result in a payment of four or more times the policy’s cash surrender value, which can go a long way toward long-term care or retirement expenses. It is also a much greater payout than allowing the policy to lapse, in which case you’d receive nothing apart from an end to premium payments.
Life settlements are an option for universal and whole life policies, and in some cases even term life insurance policies. Additional eligibility criteria include:
- You are age 70 or older (or younger in some cases)
- Your health has changed since purchasing your policy
- Face value of your policy $100,000 or more
These transactions are safe, secure, and highly regulated. When you work with a licensed and reputable life settlement company like Lighthouse Life, we manage and adhere to all necessary regulations on your behalf.
If you have been diagnosed as terminally ill, a viatical settlement may be especially beneficial in covering your expenses. Generally, viatical settlements are tax-free as opposed to life settlements where you may pay taxes on any profits earned. This is not tax advice, and you should still consult a tax professional regarding either type of settlement.
Consider a Life Settlement to Cover Long Term Care Costs
If a life settlement sounds like a feasible option for your needs, find out if you are eligible. Start by filling out our free, fast life settlement calculator to generate an estimate with no commitments. If you have any questions, the Lighthouse Life team is happy to help you via chat, email, or phone.
