Paying for long-term care is one of the most pressing financial challenges many families face. One little-known option is converting a life insurance policy into a Long Term Care Benefit Plan. This strategy can provide immediate funding for care without needing to lapse or surrender the policy.
What Is a Long Term Care Benefit Plan?
A Long Term Care Benefit Plan is a financial option where an existing life insurance policy is sold for its present value, and the proceeds are used to pay for senior care services.
Key features include:
- Policyholders can use the funds for assisted living, memory care, nursing homes, or in-home care.
- The policyholder no longer pays premiums.
- Payouts are made monthly to the care provider.
- Funds are Medicaid-qualified, so this option does not count as a disqualifying asset.
Who Qualifies?
Generally, policyholders aged 65+ with a policy value of at least $50,000 may qualify. Both term and permanent policies are eligible.
Example Comparison Table
| Option | Traditional Life Settlement | LTC Benefit Plan |
|---|---|---|
| Upfront Payment | Yes | No (Monthly Payouts) |
| Use of Funds | Any | Senior Care Only |
| Medicaid Impact | Counts as Asset | Not Counted as Asset |
| Keeps Policy in Force | No | Yes (Until Benefits Used) |
Legal Considerations
- Consult with an elder law attorney before making any changes to your policy.
- You may need to notify beneficiaries.
- Ensure the provider is licensed in your state.
Learn more about Life Care Funding and how these plans work.
For general information on long-term care planning, visit LongTermCare.gov.
