The Long Term Care Benefit conversion option is designed to serve a large but ignored population. This large population of middle market life insurance policy owners with polices under $500,000 of death benefit value end up either lapsing or surrendering their in-force life insurance because they can no longer afford to pay the premiums and/or they are on a Medicaid spend down path. Owners of small face policies with an immediate need for long term care are not ideal candidates to purchase a long term care insurance policy. As an alternative to policy lapse or surrender, the Long Term Care Benefit conversion is an immediate option to use their life insurance policy to pay for long term care. The in-force life insurance policy can be converted to a long term care benefit account in as little time as 30 days and then administered by a third party with payments made every month directly to the enrollee’s choice of long term care provider: home health, assisted living, or nursing home.
For families with the need to pay for long term care, but are unable or unwilling to keep their life insurance policy in-force by maintaining premium payments, the Long Term Care Benefit conversion option is a much better choice than abandoning a policy. Policy owners use their legal right to convert an in-force life insurance policy to enroll in the Benefit Plan and are able to immediately fund their care through a guaranteed monthly payment stream for the entire benefit period. Providers of long term care services such as nursing homes, assisted living communities and home health agencies have been quick to embrace this alternative form of payment. State governments too are realizing that there is tremendous value to be found by converting life insurance policies to help pay for the costs of long term care.