Life Settlements for Long-Term Care Planning

Clock July 14, 2020


If you are 65 or older, you’re likely thinking about your family and how to best support the next generation. Part of this involves planning for the future.

It’s hard to imagine a time when you might need long-term care. But if or when that time comes, it’s important to have enough money to cover these expenses. Planning ahead financially for long-term care helps ensure that your spouse, partner and children will be protected from the financial burden of paying for the long-term care services and expenses you might need while in your home, at an assisted living or skilled-nursing facility, or in a nursing home.

elderly couple using a life settlement to pay for long term care expenses

“There’s no doubt that long-term care is expensive,” says Michael Freedman, CEO of Lighthouse Life. “But having a plan to pay for your care can make a big difference in the quality of your life and the lives of your family members. The key is creating a plan that works for your needs.”

According to financial advisors, there are many ways you can pay for your long term care.

Government programs such as Medicaid and Medicare are often relied upon by seniors, but both have limited benefits, and Medicaid begins only after your savings have been exhausted.

If you’ve already explored traditional options for long-term care planning and are still looking for ways to accommodate your personal situation, consider a life settlement.

In this simple guide, we’ll explore life settlements and how selling a policy to pay for long-term care makes sense for many seniors and their families.

How to Pay for Long-Term Care with Life Settlements

Do you have an old, unneeded or unaffordable life insurance policy? It’s possible to sell it for a market value and use the proceeds from the sale to plan and pay for long-term care services and expenses. A life settlement is the sale of a life insurance policy, and you can learn more about it from licensed life settlement companies and brokers.

Here’s how life settlements work:

Check if You Qualify for a Life Settlement

If you’re thinking about selling your life insurance policy, you’ll need to find out if the policy qualifies. Here are a few important things to consider.

If you own a life insurance policy that is $100,000 or more, you might qualify for a life settlement transaction. In most cases you must be 65 or older and have experienced a change in your health since you purchased the policy. However, there are growing options for people with no health impairments.

At Lighthouse Life, we offer a quick and easy process to see if you can sell your policy to help plan and pay for long-term care costs. All you need to get started is to complete a short online form with a few questions about yourself, your policy, and your health.

When to Sell Your Life Insurance Policy

If you want to see if you qualify, it’s time to begin the appraisal process. This is quick and easy with Lighthouse Life. In most cases, we pay policyowners within 45-60 days from when they first contact us.

Is there a good time to sell your life insurance policy? Yes, it’s when you’re satisfied with the offer. Keep in mind that you could be eligible to get a lump sum payout for the sale of the entire policy, or you might be able to keep a portion of the policy’s death benefit for your loved ones, or both. The goal is to receive enough for you to use for long-term care planning.

Open a Savings Account for Long-Term Care Planning

If you accept an offer to sell your policy, there are a few things you’ll need to do before you can receive your funds. First, you’ll need to know if the amount you receive is taxable, which might reduce the payout. In most instances, no taxes will be due, but you are encouraged to speak with your tax specialist.

Also, it is good planning to deposit the money received from a life settlement in a separate bank account just for long-term care planning and expenses. This way you can track these expenses in case you eventually want or need to qualify for Medicaid.

Paying for Long-Term Care with Life Settlements

Cashing in your unneeded or unaffordable life insurance policy is a smart way to prepare for the costs associated with long-term care. In fact, if you don’t sell a policy that you no longer want or need, you risk losing your investment by surrendering the policy or stopping payments.

To learn more about life settlements, long-term care planning, or to see if you qualify, please contact us today.

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