“The two most important driving forces for the federal budget are the aging of the U.S. population and rapidly rising health-care costs.” - Federal Reserve Chairman Ben Bernanke A Long Term Care Benefit Plan is the conversion of an in-force life insurance policy into a pre-funded, irrevocable Benefit Account that is professionally administered with payments made monthly on behalf of the individual receiving care. This option extends the time a person would remain private pay and delays their entry onto Medicaid.
“In the coming decades, many Americans will not have a way to pay for long-term care services. As the population is aging, the need for long-term care services is exploding. However, as the need for services increases, government funding will not be able to keep up, undermining a critical component of the nation’s health care delivery system.” –The Long Term Care Funding Crisis Milliman Consulting
Lack of understanding • Most people falsely assume that Medicare or Medicaid will cover their choice of long term care in future. • Most people will spend all savings on long term care in a year or less. • Many people are unwilling to admit to themselves they have a need for care, don’t understand the types of care, and often don’t recognize a loved one is already providing them long term care.
Alarming Statistics • 10,000 Baby Boomers turn 65 every day • 70% of them will need some form of long term care (40% in a nursing home) • 60% of people incorrectly think Medicare will cover Assisted Living or residence in a Nursing Home • 92% incorrectly estimate the costs of Assisted Living and Nursing Home Care
Seniors in the US own approximately $500 billion of life insurance Very limited options to access value in a policy Stop paying premiums and lapse or abandon policy • Can’t afford premiums? • Need to qualify for Medicaid? Surrender policy back to insurance company (usually less than 10% of face value) 88% of policies lapsed or surrendered for little or no value 38% of Medicaid applicants must liquidate policy to qualify THERE IS A BETTER SOLUTION… *Source: Conning and Company Research
Long Term Care Benefit Plan • Convert the death benefit of a life insurance policy into a Long Term Care Benefit Plan to cover the costs of Senior Living and Long Term Care. • No costs or fees • Simple application and approval process (30-60 days) • All types of in-force life insurance qualify • No age restrictions • No medical underwriting required– APS review and phone interview to verify care needs • No more premium payments for enrollee • Monthly payments made directly to care provider/facility • Final expense funeral benefit or account balance paid to family at time of death • Benefit can be adjusted to match changing needs • Nursing Home, Assisted Living, Home Health and Hospice all qualify • Available in all states • Medicaid qualified spend-down while remaining private pay as long as tax advantaged Benefit Account lasts** • **(sec. 1016 U.S. Master Tax Code 2008) and IRC Section 101(g)
Enrollment Criteria: • Immediate need for Long Term Care (within 90 days) • Any typeof in-force life insurance accepted • Death benefit $50,000-$1,000,000 • No Age minimum • Simplified underwriting: APS review and phone interview to verify care needs • Time to close 30-60 days • Funds used for Senior Care of any form • Account can pay for outstanding balances • Monthly amount can be adjusted and moved from one care provider to another
Enrollment Example #1 Case Study: 37651290D Policy owner: 86 MalePolicy value: $90,000 (UL) Lapse Value: $0 Cash Value: $0 Long Term Care Benefit: $31,500 or 30% of death benefit - $1,800 monthly Benefit payment to Assisted Living community for duration of benefit period. - $4,500 Final Expense benefit issued at maturity.
Enrollment Example #2 Case Study: 14793181H Policy owner: 70 MalePolicy value: $250,000 (term) Lapse Value: $0 Cash Value: $0 Long Term Care Benefit: $150,000 or 60% of death benefit - $30,000 initial benefit payment to cover out-of-pocket expenses to retrofit home and purchase specialty bed. - $10,000 monthly Benefit Payment for duration of benefit period. - Account balance of $70,000 and $5,000 Final Expense benefit issued at time of death.
In 2010, the National Conference of Insurance Legislators unanimously passed the Life Insurance Consumer Disclosure Model Law. Conversion of a life insurance policy into a Long Term Care Benefit Plan is one of the mandated options in the Model Law. In 2013, multiple states introduced Life Policy Conversion Consumer Disclosure LawsGranting Medicaid Departments authority to educate citizens they have right to convert life policies to pay for any form of care they select. : CA, FL, KY, LA, MA, ME, NJ, NY, TX
“…Life Care Funding puts the money in an FDIC insured account used to send monthly payments directly to a long term care provider…You can switch from one provider to another as your needs change; but you can’t use the money for a vacation (or blow it at a casino).” 10/9/2013 “But a few state law makers who have introduced laws to publicize the [Benefit Plan] option have pointed out that it beats surrendering a policy to access government benefits while also giving families more control over how to spend the money.” 8/30/2013 “Texas enacted a law earlier this month that gives state Medicaid officials the authority to tell people applying for help they can sell long-held life-insurance policies to a third party to pay for custodial health care of their choice.” 6/27/2013
RESOURCES • Educational materials about how a Long Term Care Benefit Plan works: • Brochures • Family Testimonials • Videos • Articles and White Papers • Seminars • Website and Social Media • Phone Support
“Long-term care is the sleeping giant of all U.S. social problems. It is most certainly the biggest age-related challenge our country faces.” – National Endowment for Financial Education As Seen in--