Paying for Elderly Care with Life Insurance
Elderly care is not cheap, and some people worry that they will not be able to afford it. Actually, there are numerous different ways to pay for elderly care. One of these could be life insurance. However, keep in mind that cashing out life insurance could have fallout. For example, it could be enough to keep the elderly individual from qualifying for Medicaid. So, you will need to weigh these things against each other before your elderly loved one cashes out their policy. There is another option, though. Some life insurance policies can be converted into something called a long-term benefit plan.
What Is a Long-Term Benefit Plan?
Certain types of life insurance can be converted. This means someone will be put in charge of the value of the policy and they will act as a benefits manager. Then, the money will be used to make direct payments to a nursing home, hospice, or an in home care service. Since the money isn’t given in a cash value, your elderly loved one will still qualify for Medicaid. This means that long term care could be paid for without sacrificing anything.
Advantages to Converting
- Before making this decision, there are some things that you and your elderly loved one will need to consider very carefully. Let’s look at the advantages first.
- Your loved one will no longer need to make insurance premium payments.
- Whole, term, or universal life insurance can be converted in this way.
- The monthly payments can be adjusted to suit needs.
- They will not interfere with Medicaid.
- Money will still be set aside for funeral expenses.
- The insurance can be used with virtually any type of elderly care.
As you can see, there are certainly benefits that can ensure your loved one gets the care they need without causing any financial problems. However, there are a couple of disadvantages that you do need to keep in mind as well.
The Disadvantages to Converting
There are two main things you need to think about when it comes to converting a life insurance plan. The money will g only o to the care provider and it cannot be saved up for the future, so your loved one must need elderly care right away for this to even be used. Secondly, smaller policies will simply not pay out enough to make a difference in the cost of elderly care. Usually, the best cash value would be $100,000 or more for this conversion to be worth it.
This is one of the many ways you can find extra funding to pay for elderly care, whether that involves in home care or a nursing facility. If you would like to explore all of the options before making a decision, then read this article (How to Pay for in Home Care with Public Benefits) that will explain how your elderly loved one could use Medicare and Medicaid to pay for care. You could also read this article (Three Ways to Use Personal Assets to Pay for in Home Care) that will help you determine if you have assets that could help with the cost.
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