What Are Long Term Care Benefit Plans?

A Long Term Care Benefit Plan is the conversion of an in-force life insurance policy into a pre-funded Benefit Account that is professionally administered with tax free payments made monthly on behalf of the individual receiving care directly to their choice of care or senior housing providers.

Conversions are accomplished by selling a percentage of the life insurance policy death benefit via a Life Settlement transaction to obtain the full fair market value for the life policy and then placing all funds directly into an irrevocable, FDIC insured Irrevocable Benefit Account. This account is then held and administered at a national chartered and regulated Bank and Trust institution managed by a licensed Benefit Administration company. The policy holder is released from future premium obligations and the entire proceeds from the policy settlement are placed into the account and then disbursed at the direction of the family or patient to fund all or a portion of their long term care or senior housing needs.

From the time of acceptance of the conversion offer, the account can be established and funded, with payments to the care provider starting within as little as 30 days. In addition to being a Medicaid qualified spend-down inside the look back period, the Benefit Account is tax free because funds are spent on qualified care. The account preserves a portion of the proceeds for a funeral benefit for the family or it will pay the entire balance to designated beneficiaries if the account holder should die prior to account complete spend-down.

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Qualifying Policies For A Long Term Benefit Plan

  • Universal Life
  • Whole Life
  • Term Life
  • Group Life

Learn More About Long Term Care Benefit Plans

Why Long Term Care Benefit Plans?

Long Term Care Benefit Plans help families quickly establish effective and flexible funding solutions to insure access to their chosen care provider with minimum hassle and maximum tax advantages.

When you made the decision to purchase life insurance, it was likely for all the right reasons – either to provide financial security for your family after you are gone, build or transfer tax-advantaged wealth, or to cover end-of-life expenses and minimize estate taxes. However, providing funding solutions to meet long term care needs arising as a result of aging, illness, or disability was probably not a primary reason for securing coverage.

Yet the facts are that less than 15% percent of all life insurance actually ever pays death benefits to anyone, and yet with 70% (not 40%) of all seniors, and millions of other Americans facing long term care needs as a result of critical illness, accidents, or disability, the need for creative care funding resources for families has never been greater. With average monthly nursing homes costs rising to more than $7000 and annual nationwide full-time in home care costs now exceeding $76,000, the financial pressures on families to care for their loved ones can be crushing.
Currently, fewer than 10 million Americans have any type of Long Term Care Insurance coverage. And even for the fortunate 3% of the population with coverage, as long term care costs continue to escalate, even these policies typically have specific coverage limitations ultimately leaving funding gaps to address full care needs for many.

While Medicaid provides some degree of coverage protection when needs exceed resources, Medicaid qualification can be complex and extended, and requires first full depletion of all other financial assets, including life insurance. Further, dependence upon Medicaid for primary care funding, significantly narrows desirable care options for patients and families. Instead of lapsing or surrendering a life insurance policy to qualify for Medicaid coverage, converting the policy to a Long Term Care Benefit Plan immediately creates private pay resources affording greater freedom of choice among care options for families.

By leveraging your legal rights to convert in-force life insurance policies into a Long Term Care Benefit Plan, you are able to tap all of your resources while still living to support private pay care needs – thus immediately helping to insure the highest possible quality of life for yourself and your loved ones.

Who Qualifies For A Long Term Care Benefit Plan?

While each case is unique and evaluated individually, to be eligible for Long Term Care Benefit Plans, policy holders must meet the following criteria:

  • A valid in-force life insurance policy of minimum face value of $50,000 up to $1,000,000, that has been in place a minimum of two years. Any type of policy may qualify including universal life, whole life, convertible or non-convertible term life, or even group life.
  • Current need for exists for homecare, assisted living, nursing home care, memory care, or hospice, or is anticipated within 90 days of enrollment.

To find out if you qualify, contact Life Settlements Northwest today to for a complimentary assessment to explore if and how a Long Term Care Benefit Plan might help you get the funding you need. We serve clients in Seattle, Bellevue, Tacoma and throughout the Northwest!

Rob Secures Quality Home Care Funding

Age: 76 Year Old Male
Policy Size: $500,000
Carrier: Protective Life
Policy Type: Universal Life
Annual Premiums: $45,000
Cash Surrender Value: $0


The Challenge: After completing a 6 week rehab stay and facing declining health, Rob and his family were considering lapsing his life insurance policy to eliminate the premium expense as a way to afford anticipated home care costs.

The Results: Rob’s insurance agent approached us to explore the Long Term Care Benefit Plan option. Within one week, Rob was approved, accepted an offer, and was enrolled in the program. In addition to eliminating the $45,000 annual premium expense, Rob also received a Benefit Account with an $85,000 balance. He and his family enjoyed 23 months of home care funding of $2500 and a $5,000 funeral benefit.

Myron Insures His Ability to Stay in His Preferred Care Facility

Age: 72 Year Old Male
Policy Size: $400,00
Carrier: MetLife
Policy Type: Guarantee Advantage UL
Annual Premiums: $20,000
Cash Surrender Value: $17,822


The Challenge: Myron had already been comfortable in an assisted living facility for several years, but was running out of private pay resources. Working with his Elder law attorney and the senior community team, we quickly analyzed his care needs and quickly qualified him for conversion of his policy.

The Results: Myron received and accepted an offer for $82,940 for deposit into his Long Term Care Benefit Account and enjoyed a $4000 monthly benefit payout for 19 months enabling him to stay in this preferred facility and preserved a Funeral Expense Benefit totaling $6,940.

Eddie and Helen Enjoy In-Home Care to Keep Them in Their House

Age: 81 Year Old Male & 73 Year Old Female
Policy Size: 2 policies at $300,00 each
Carrier: Southwestern Life
Policy Type: Non-Convertible Term
Annual Premiums: $57,000 Total
Cash Surrender Value: $0 – Policy in grace at application


The Challenge: Married couple Eddie and Helen owned $300K term life policies on each other that were both beyond the conversion date and had become too expensive to maintain. Due to expense they decided to let the policies lapse as a means to afford in-home care which had now become necessary to keep them out of a nursing facility.

The Results: They received a Long Term Benefit Account totaling $150,000 to support their in-home care needs within 45 days –using policies that were rescued just days before lapsing.

Why Select The LTCBA Option?

Ease of Use

  • Most types of policies can qualify including Term, Universal, and Whole and Group life insurance contracts
  • Simplified underwriting process requires only a review of medical records from the last two years and a phone interview to qualify type of care needs. No medical examinations required.
  • Application and enrollment process is streamlined with first benefit payments being delivered in as little as 30 days.
  • Account pays a monthly benefit directly to the care provider of choice.
  • This program is already endorsed by over 5,000 Assisted Living, Homecare, and Nursing Home companies nationwide and accepted by virtually all providers.
  • There are no obligations to apply, and no costs to policy holders to enroll.

Protection

  • All settlement proceeds from policy transfer are placed in an irrevocable FDIC insured bank & trust account to protect funds for account holder.
  • The Benefit Account is a Medicaid qualified spend-down tool so once the account is depleted, the account holder can immediately transition to Medicaid to pay care costs.
  • The account is tax advantaged because funds are spent on long term care.
  • The account preserves a funeral benefit totaling the greater of 5% of the death benefit, or $5,000, for the family.
  • If the account holder dies before the account has been spent down, all remaining proceeds will be paid to the designated beneficiaries.

Flexibility

  • Virtually any type of long term care expense can qualify including home care, nursing home, licensed independent living, assisted Living, memory care, hospice, or even medical equipment or related home remodeling.
  • Amounts and providers paid can be changed with a 30 day advance notice.
  • Additional amounts can be withdrawn for one-time special needs or circumstances

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To find out if you qualify for a Long Term Care Benefit Plan, please complete our brief 5 minute questionnaire.

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