Saturday, April 15, 2017

Life insurance: The long-term care bill answer

By Miguel Casellas-Gil

Even as aging Americans revel in the splendor of their well-earned retirements they still harbor plenty of worries, such as outliving their savings.

Near the top of the worry list is the fear their health will deteriorate so much they’ll be forced to seek long-term care, a situation that could live them and their families slammed with expenses far beyond what they can afford.

Surprisingly enough, the solution to this particular problem may be right in their home, tucked away in a drawer.

“Many people don’t realize that a life insurance policy can be converted to pay for assisted living, home care and all other forms of long-term care,” says Chris Orestis, a senior-care advocate and author of the books “Help on the Way” and “A Survival Guide to Aging.”

“What’s really sad is that, when they’re suddenly confronted with the reality of long-term care expenses, some older people may let the policy lapse figuring they can no longer afford it. And it’s the very thing that holds the answer to their financial worries.”

Part of the problem is that, while millions of people own life insurance policies, few of them understand their rights as owner, says Orestis, CEO of Life Care Funding (www.lifecarefunding.com).

“Life insurance policies are assets,” he says. “Think of them just like a house. The owner of a house wouldn’t just move out without selling their property. Why should the owner of a policy ‘move out’ without first finding out what the real value of the policy is?”

Here are a few key facts about how that life insurance policy can be converted to a long-term care benefit plan and potentially rescue from the senior and their family from the back-breaking financial strain of long-term care:

• The benefit plan is not long-term care insurance. A long-term care benefit plan allows policy holders to use any form of life insurance policy to pay for long-term care. In essence, what was a death benefit that would have been paid to the person’s survivors becomes a “living benefit” that covers the expenses of the policy holder now.
• You can convert when you need it. You can’t wait until you’re about to move into a nursing home or assisted-living facility to buy long-term care insurance. At that point, it’s too late. But you can convert a life insurance policy to a long-term benefit plan at any time. There are no waiting periods, no care limitations and there are no costs or obligations to apply, Orestis says.
• The full death benefit comes into play. The value of the conversion is not limited to the cash value, but is based on the death benefit. “That means the senior will receive a maximum amount of value toward their long-term care benefit plan,” Orestis says. If the insured person dies before the benefit amount is exhausted, any remaining balance is paid to the family or the named beneficiary as a final lump-sum payment.

 “Families can go broke trying to provide for a loved one,” Orestis says. “In many cases, they could have avoided it but they had only known about this solution.”

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