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

23 Comments

I have been my husban's caregiver for over 20 years. The last 5 years have been the hardest and I am completely drained and on the verge of breaking physically, mentally and spiritually. Years before my husband became sick he had bought several term life insurance policies including disability weavers when our kids were young. Before our 2 youngest graduated from high school, my husband became seriously sick and became totally disable in his mid 40. Thankfully the disability waivers kicked in and took over the insurance premium payments for the past 20 years. Recently I was informed by the insurance company that as soon as my husband turns 65 years of age which will be in 3 months, his term life insurance policies will be converted into whole life on their anniversary dates and the premium payments still will be taken care by the waivers. Been a full time caregiver to my husband for over 20 years, I am now at the point of breaking down physically, mentally and spiritually. The amount of my husband's disability income and IRA made him in-illegible for Medicaid. I need help and guidance to get my husband into a long term care facility. Been under stress and depressed for so long I have problem processing information. Please be specific. Thank you.

What about when they outlive their policy? All those premiums down the drain...

Please explain how $350 per month can pay for in home care giver as you say below?
"Mary cannot continue to make the payments on this policy and considers letting it lapse. Instead, she ends up converting it into a long-term care benefit plan that pays $350 every month, for 15 months, enough money to hire a home caregiver to help her take care of Bill".

I actually purchased a convertible LTC policy that, if I do not use for long-term care, will be a $100,000 insurance policy. I also have another LTC policy I got through my work--it's expensive, so I almost hope I get to use it!

TERM with a value of at least $50,000 may be converted.
You can contact me via profile info

It talks about "cash value," but Term Life has no cash value... can this still be converted then? Would the value for Term Life just be the total premium dollars you've put into it thus far??

Can the care be used for a ND, supplements, physical therapy, mental counseling, or things like that?

I, you, can convert any Existing Policy with a Death Benefit (Face Value) from $50,000 to 1 million, The results are (for folks in need of Long Term Care ),usually more favorable than a straight out life settlement, (which is also doable),

There are indeed cautions that must be understood that will apply to most instances on this forum; for those doing a life settlement only that being consideration of later(if needed), MEDICAID Eligibility, A life settlement may very well cause eligibility problems, vs. the conversion ability to pay for care & IS MEDICAID APPROVED.

With proper planning it will not be considered an asset; and will not affect VA eligibility. A life settlement would.

The owner of a policy may change the beneficiary. It is property and assignable.

Note to KM1027: you have been given faulty info; you are not "forced" to merely surrender at cash value. Policies can be Term, whole Life, Universal Life, Group, (once converted you no longer have to pay premiums) I know this as I have counseled and helped families with this option. Unused converted benefit will then be passed on as per stated instruction of the "insured"

Doesn't the death benefit go to the beneficiaries a priori, as in isn't that a given, by default?

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There is another excellent option for large policies, which is a life settlement. Rather than give the policy up for the surrender value, policies with a death benefit of $100,000 or more should be evaluated to see if a life settlement could bring the family substantially more than the surrender value. If the policy owner wants to leave some of the death benefit for the beneficiaries, that can often be arranged as well.
Thanks,
Rick K.