Life Insurance for Long Term Care
Most people who want to provide for long-term care have a good amount of assets but not everyone has enough monthly income available to pay those long-term care insurance premiums. Many people are discovering that private funding, reverse mortgages or long-term care insurance do not work with their financial situation. What are the alternatives to long term care insurance?
Life insurance is one of the alternatives. To understand how this works you must first have a basic understanding of how life insurance works. For a simple easy to understand explanation of the various types of life insurance see our previous post Types of Life Insurance Policies
One of the alternatives to long term care insurance is to use a viatical settlement firm:
A viatical settlement company can buy your life insurance while you are alive. The company becomes the beneficiary of your policy and continues to pay the premiums. You get a lump-sum payment while you are alive that you can choose to use for long-term care needs.
The amount that you receive from a viatical settlement company ranges most often from 10 to 50 percent of the actual value of the policy. The amount you receive depends primarily on your life expectancy – the shorter your life expectancy the higher percentage of your policy’s death benefit you likely to receive.
Here is what you need to look out for with viatical settlement firms. Only about half of the states regulate viatical settlement companies. Even in the states that do regulate there are “bad” companies who will try to cheat you.
Your best bet is to talk to your agent and get their advice about viatical settlement firms.
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