The U.S. and the state of Wisconsin is experiencing a massive influx of seniors and Baby Boomers hitting the long term care system at the worst possible time from an economic perspective. This economic crisis now well into its third year is translating into less tax dollars for Medicare and Medicaid to pick up the costs of long term care which is forcing more emphasis back on the consumer to cover costs out of their own pocket. Seniors and their families are uninformed and unprepared to handle the costs and navigate the LTC industrial complex. Studies show the majority of people don’t save or plan for LTC until they are hit with a health crisis.
A way that seniors could help pay for the costs of long term care is through the conversion of a life insurance policy into a long term care benefit plan. Life insurance is legally recognized as an asset and it is the personal property of the owner with guaranteed rights. Among these recognized rights is converting a policy for any legal purpose that best suits the owner. According to the NAIC, there are 3,175,000 in-force life insurance policies in Wisconsin. A huge percentage of these polices will never pay out a death benefit because they will either expire, be surrendered for any remaining cash value or the owner will allow it to lapse. Seniors are particularly vulnerable to abandoning a policy because the cost of keeping it in force can become too much when confronted with the costs of long term care. They do not know they have other options to consider instead of abandonment and the life insurance industry has no incentive to notify seniors otherwise.
To read the complete letter submitted by LCFG to the WI Legislature, click the link below