When it comes to paying for senior living and care, your life insurance policy is often an overlooked asset! And if you own your policy, it’s no different than owning any other type of asset. It’s yours to maintain or dispose of as you see fit.
If you or your loved one are wondering how to pay for senior care, a life settlement might be the right solution for you, especially if you need cash now, whether it’s for monthly care payments or rent at a senior living community. Here, we’ll explain how life settlements work, why families use them, and how one might help smooth the transition to and pay the costs of a senior living community.
What is a life settlement?
With a life settlement, life insurance policyholders can sell their policy to a third party for a lump sum greater than its cash surrender value (but less than the full benefit). In return, the buyer, typically a broker, will take over the policy and pay the premiums and receive the benefit when the insured person passes away. Although the family will no longer receive the policy’s payout, its cash value can provide financial flexibility on short notice for senior living or care.
What is a life insurance conversion?
Life insurance conversions are much like life settlements, with some key differences.
- These allow you to transform your existing life insurance policy into a pre-funded account with monthly payouts that can be used for long-term care.
- Choosing one can help you keep your policy from lapsing if you can’t make the premium payments, rather than surrendering it.
- Plus, there are no long delays for approval, since it is based on the existing policy and the policyholders’ current health condition.
Why use a life settlement or life insurance conversion to pay for senior living?
When it comes to paying for senior living and care, being able to convert an existing life insurance policy into cash can be invaluable, especially if you need immediate funding for senior living, caregiving support, or other aging-related expenses. It’s also a good option if you no longer need the coverage or don’t want to use your savings or sell your home to pay for senior care.
Once you’ve sold the policy, proceeds can be invested in income-generating assets including:
- Treasury Inflation-Protected Securities (TIPS)
- Dividend-paying stocks
- Fixed annuities
- Money market accounts
- Certificates of deposit (CDs).
If all that financial jargon sounds confusion, our friendly community advisors at your chosen Provision community will be happy to recommend a financial advisor who can help guide you through the process.
Your next steps
Whether you’re just starting to explore your senior living options or need care now, our helpful Provision Living teams will be happy to explain your financing options, including life settlements, life insurance conversions, and more; introduce you to trusted lenders and financial advisors who specialize in life settlements and conversions; and provide emotional support as you and your family navigate the process.
Looking to learn more about financing a transition to Provision? Speak to one of our helpful community advisors. And if you’re ready to see our communities in person, don’t hesitate to schedule a visit today!
