Convert Existing Life Insurance Into a Long-Term Care Benefit Plan

Jackie Bedard
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Attorney, Author, and Founder of Carolina Family Estate Planning

What is a Long Term Care Benefit Plan?

A Long-Term Care Benefit Plan is the conversion of an existing, in-force life insurance policy into a pre-funded, irrevocable Benefit Account that is professionally administered with payments made monthly on behalf of the individual receiving care.

The Benefit is not long-term care insurance or a policy loan of any type. It is a unique financial option for seniors because all health conditions are accepted, and there are no wait periods, no care limitations, no costs to apply, no requirement to be terminally ill, and there are no premium payments.

A Long-Term Care Benefit Coverts Life Insurance Into Monthly Payments Covering Any Form of Senior Care

Instead of lapsing or surrendering life insurance – a policy can be converted into an irrevocable Benefit Account that makes monthly payments on behalf of the individual receiving Senior Care. There are no wait periods; no care restrictions; no costs or obligations to apply; it is not a loan; and there is no need for premium payments.

A Long-Term Care Benefit is flexible and can be adjusted to meet changes in Senior Care needs; it provides a funeral expense benefit; and any remaining account balance is paid to the family. After years of premium payments, many policy owners will allow a policy to lapse or surrender it for any remaining cash value. This is a big mistake when the same policy could be used to pay for the costs of Senior Care.

Long-Term Care Benefit Examples

Example 1:

Gender/Age

Male/77

Policy Size

$100,000

Policy Conversion

$45,000

Monthly Benefit

$4,500

Benefit Duration

9 months

Funeral Benefit

$5,000

Example 2:

Gender/Age

Female/74

Policy Size

$50,000

Policy Conversion

$21,700

Monthly Benefit

$800

Benefit Duration

24 months

Funeral Benefit

$2,500

Example 3:

Gender/Age

Female/76

Policy Size

$376,000

Policy Conversion

$104,000

Monthly Benefit

$5,000

Benefit Duration

20 months

Funeral Benefit

$5,000

The examples above are for illustrative purposes only and do not constitute a guarantee for other transactions. Source: Life Care Funding

Frequently Asked Questions

Is the Benefit Plan an LTC insurance policy?

No, it’s a Long Term Care Benefit Plan administered by a third party on behalf of the insured and family with the payments sent every month directly to the provider of long term care services.

Are there any fees charged or premium payments?

No, there are no fees or obligations to apply and no more premium payments due on the policy.

Are funeral expenses covered?

Yes, a funeral benefit is paid to the family.

What type of life insurance policies qualify?

Most forms of in-force life insurance qualify including Term, Universal, Whole, and Group so long as the death benefit is $50,000 or greater.

What type of care will the Benefit cover?

• Home Care (private-duty and skilled nursing)

• Assisted Living

• Nursing Home

• Hospice Care

Is the policy sold?

Yes, as part of the Benefit Plan enrollment the policy owner will complete a life settlement working directly with a licensed Provider.

We Can Help You Develop a Long-Term Care Plan

Having assisted many Wake County clients with long-term care planning, our team at Carolina Family Estate Planning understands that developing a long-term care plan is about not just protecting your own independence and dignity, but also protecting those you love from the physical, emotional, and financial toll that caring for a loved one can take.

We’ve helped many clients take an interdisciplinary approach to their long-term care planning by exploring both legal and financial options. Usually, a well-rounded long-term care plan will involve a combination of legal, health care, and financial tools to meet your goals and maximize your protection. To get started, register an upcoming seminar to learn more or call our office at 919-443-3035.

 

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