Financing Care Through Life Insurance

Your Life Insurance Policy 

An Innovative Way To Finance Long-Term Care


These days, it seems as if almost everyone is dealing with caring for an aging parent.  More and more, conversations center on talking to doctors, putting up grab bars in thebathtub, and wondering if it’s time for Mom or Dad to move into an assisted living facility or a nursing home.

In addition to the emotional toll imposed by making difficult decisions, adult children who suddenly find themselves in a caretaker role are also grappling with the issue of how to pay for their parents’ care. While there are many possibilities, one is less feasible or appealing than the next. How to apply for Medicaid and does my parent qualify? Try to sell the house, even in this difficult market? Consider a complicated reverse mortgage?  Go through parents’ life savings, watching their hard-earned dollars drain away faster than they ever dreamed possible?

In the midst of the turmoil of this unexpected phase, there is good news: an existing life insurance policy can be used to pay for long-term care. The process is simple and straightforward. The owner of a life insurance policy has the option of converting it into a long-term care benefit at higher than the policy's cash value and using it to pay for assisted living, nursing homes, and home health care. Hence, an abandoned and useless asset is turned into something of greater value, with attractive financial benefits for the individual and his or her family. Remarkably, a term life insurance policy – with no existing cash value – presents the opportunity to be used in the same way.

There are numerous advantages. First, converting the policy into a long-term care benefit will likely yield a sum greater than a policy's surrender value.  There is no waiting period, with the entire conversion process taking about three weeks.  The process is undertaken by a specialized eldercare financial services provider who purchases the individual's life insurance policy, converts it into a long term care benefit, pays the senior care facility and continues to pay policy premiums. 

Until recently, life insurance companies often failed to disclose the fact that life insurance policies offered this benefit.  They argued that policy owners would become confused if they were given too much information.  Instead, when aging policyholders contacted their insurance company to explain that they were having trouble making the payments, a common response would be that they had only two options if they didn’t pay their premium: surrendering the policy for its cash value or simply letting it lapse, and forfeiting the death benefit.

All that changed in 2010, when the National Conference of Insurance Legislators (NCOIL) passed the Life Insurance Consumer Disclosure Model Act, that will require life insurance companies in each state to inform policy holders, who are older than 60 or have a medical condition that is chronic or terminal, that there are other approved alternatives to simply surrendering their policy, including the right to convert an insurance policy into a long-term care benefit. To make the process of using an existing life insurance policy to finance long-term care, an innovative program has been developed to work with insurance companies to make the conversion smooth and effortless.

“Dealing with an aging parent is one of the most difficult challenges we come across, and it’s one that most of us are entirely unprepared for,” says Howard Chernin, Managing Director of Elder Care Financial Solutions in Hackensack, New Jersey, a company that provides the long-term benefit conversion service. “In the midst of this emotional and financial turmoil, we’re happy to use our expertise in dealing with big insurance companies.  Our goal is helping to ease the way for adult children of aging parents who are looking for a way to provide their loved ones with the best care possible.”

Coping with an aging parent is difficult enough.  Learning about ways to pay for the care that is needed is one of the best ways of keeping a trying situation from becoming even more stressful.

For More Information, Contact:

ElderCare Financial Solutions

21 Main Street

Suite 352

Hackensack, NJ 07601


February 21, 2012 | Posted by careone | Filed in News