How to Use a Life Insurance Policy to Pay for Long-Term Care

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How to Use a Life Insurance Policy to Pay for
Long-Term Care
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• An active life insurance policy is a no-no for
  individuals who are seeking to spend-down their
  assets to qualify for Medicaid.
• Considered an, "unqualified asset," any life
  insurance policy with more than 2,000 in value
  must be dealt with properly before an elder can
  receive financial assistance from Medicaid.
  (Learn more about Medicaid and long term care
  expenses)

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• Some seniors end up abandoning their policies, or
  letting them lapse, by ceasing to pay their
  monthly premiums. Others surrender their plans in
  order to receive a pre-determined, "cash
  surrender value," a lump sum of money that varies
  in value based on how many payments the policy
  holder has made and what the overall worth of
  their policy is.
• There is, however, a third option that most
  people fail to consider when facing a Medicaid
  spend down converting a life insurance policy
  into a Long-Term Care Benefit Plan.

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What is a Long-Term Care Benefit Plan?

• Anyone in possession of an in-force life
  insurance policy has the ability to transform
  that policy into a pre-funded financial account
  that will disburse a monthly benefit stipend to
  help pay for that individual's long term care
  needs. Unlike life insurance, a long-term care
  benefit plan account is a Medicaid qualified
  asset. (Learn how life insurance can affect
  Medicaid eligibility)
• The conversion process transfers ownership of a
  life insurance policy from the original holder,
  to an entity that acts as the benefits
  administrator. Because the original owner no
  longer holds the policy, it won't count against
  them in the Medicaid spend down process.

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• The benefits administrator assumes all
  responsibility for paying the monthly premiums on
  the policy to the insurance company, and agrees
  to pay the previous policy holder a series of
  monthly payments based on the value of their
  policy. These payments can then be used to pay
  for a person's home care, nursing home, hospice
  care and assisted living costs.

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Sourcehttps//www.agingcare.com/articles/use-a-li
fe-insurance-policy-to-pay-for-long-term-care-1573
09.htm