Far too many life insurance policies owned by seniors will never pay a death benefit because they are allowed to either expire, lapse or are surrendered for cash value. The shame of this situation for the consumer is that there are numerous options for them to explore before abandoning a policy. Life insurance is legally recognized as personal property, and the owner has the right to use their asset in a number of ways including converting the policy to a long term care Assurance Benefit plan while still alive.
Life insurance is an unqualified asset for Medicaid eligibility, and billions worth of policies are regularly abandoned by uninformed seniors as they enter their “long term care years”. Converting a life insurance policy into a Long Term Care Benefit plan is a Medicaid qualified spend down of the policy, and it extends the time a person remains “private pay” before going onto Medicaid. States are under tremendous budget pressure to keep pace with exploding demand to cover long term care needs with tax payer money, and they are quickly realizing the savings that can be found for their beleaguered budgets by delaying entry onto Medicaid through the use of Medicaid qualified Assurance Benefit conversions.
It is in the better interest of seniors and their family to convert a death benefit into a long term care benefit, and then apply the maximum private market value of the policy towards their health care needs. If a policy can be converted into the means to cover the costs of long term care for an extended period, and keep the insured off of Medicaid that much longer, it is in their best interest and that of the state’s tax payers. The Long Term Care Benefit policy conversion is a private sector solution that addresses the financial needs of the senior, and can also help stressed state budgets by extending the spend down period for a senior before they would go onto Medicaid.
Consumers lack preparation and awareness of how they are going to cover the costs of long term care. It is a subject typically ignored until a loved one is in immediate need of care. Families that need senior living and long term care are in a particularly difficult position if they have not planned with savings and insurance/annuities. Unfortunately, that is how you would describe the vast majority of people who require senior housing and long term care today. We need to do all we can to educate people on how to plan for their long term care futures. But what about the majority of unprepared people that need to access long term care today?
It all starts with education and awareness. Millions of seniors are holding a potential solution in their hands today if they own a life insurance policy. Unfortunately they are unaware of their legal rights and available options such as the Long Term Care Benefit policy conversion to pay for senior living andlong term care. It is common sense that the best interest of policy holders is to make decisions with full disclosure of their rights and options. Addressing this simple fact, states are now taking action to tackle this lack of consumer awareness.
As the word spreads across long term care providers, advisors and with the consumer; the growing use of policy conversions will begin to have a measurable, positive impact on the long term care funding crisis in the United States.