NOTE: The Following is a guest post from the Lifecare Funding Group, which offers funding solutions for seniors. They were interested in introducing one such solution to our audience, so we’ve invited them to offer you some more information on life care assurance benefits.
The Life Care Assurance Benefit allows the owner of an in-force life insurance policy to convert their death benefit into a long term care benefit plan to help cover the costs of Senior Living and Long Term Care.
The Assurance Benefit is not a long term care insurance policy, annuity, any form of hybrid life/LTCi policies, or an accelerated death benefit– it is actually the exchange of a life insurance policy for a long term care benefit plan at the time that care needs to be paid. The Assurance Benefit is a unique financial option for seniors because there are no wait periods, no care limitations, no costs to apply, no requirement to be terminally ill, and there are no premium payments. 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 direct payments to cover their senior housing and long term care costs.
Applying for the Assurance Benefit Plan is a simple process with the first benefit payment being issued within thirty days. Once enrolled, the benefit plan is administered on behalf of the family and the benefit payments are made directly to the facility on a monthly basis for the duration of the benefit period. If the insured should pass away before the benefit period is exhausted, then any remaining benefit amount is paid to the family or named beneficiary as a final expense payment.
The Assurance Benefit conversion option is considered a “qualified spend down” of a life insurance policy asset for Medicaid eligibility. According to a GAO study in 2007, 38% of Medicaid applicants owned a life insurance policy that needed to be liquidated to qualify.
There is almost $30 Trillion worth of life insurance policies owned by 153 Million Americans (NAIC, 2010). Of that amount, on an annual basis there is more than $100 Billion in the hands of seniors who could potentially qualify for the Assurance Benefit.
States have begun passing laws mandating that life insurance companies inform their policyholders that these types of options exist as an alternative to lapsing or surrendering a policy. In November 2010, the National Conference of Insurance Legislators (NCOIL) passed the Life Insurance Consumer Disclosure Model Act mandating consumer disclosure about options, such as the assurance benefit, to policy owners and it is being introduced in state legislatures around the country. As Medicaid budgets continue to be pressed, more efforts such as this to find private market solutions will be mandated as part of the landscape.
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. Legislative and market activities across the country clearly point to the growing realization that life insurance policies are an asset well suited to help pay for long term care. Too few seniors realize their policy could be used for purposes other than a death benefit.
Families with the need to pay for long term care that are unable or unwilling to keep their life insurance policy in-force by maintaining premium payments, or are planning to abandon as part of a Medicaid spend down regimen, the Assurance Benefit conversion option is a much better choice.
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