COVID Crisis: Fund Safer Alternatives to Nursing Home Care with a Life Settlement

20Aug '20

COVID Crisis: Fund Safer Alternatives to Nursing Home Care with a Life Settlement

The spread of the COVID-19 virus among elderly patients in senior living communities and congregate care facilities is causing many families to reconsider the safest place for mom and dad.

Many families are torn by the knowledge that their elderly loved ones are isolated in their rooms and only permitted to see visitors while looking through a window. Most facilities have suspended all communal activities such as group dinners and other joyful social events.

Rather than allow their elderly loved ones to face extreme loneliness and the constant threat of contracting COVID-19, some families are exploring the idea of moving their elderly loved ones back into the family home and hiring home health aides.

While some families are financially capable of absorbing the hourly cost of in-home care for mom and dad, the price tag can be out of reach depending on the hours per day that care is needed.

But where do families find the extra cash to hire in-home health aides or to pay for home modifications for wheelchair accessibility?

The answer could be as simple as selling an unwanted life insurance policy, known as a life settlement.

How Much Cash Can I Get From a Life Settlement?

On average, policy sellers receive four to six times a policy’s cash surrender value. But in some cases, policies have no cash surrender value. So for a policy with no cash surrender value that is on the verge of lapsing, selling the policy for a substantial amount of cash is clearly a financially prudent course of action.

Another gauge often used in the industry is to compare the cash offer to the amount of the death benefit with the average cash offer being approximately 25 percent of the policy’s face amount. According to an article published by BankRate.com, “life settlements can offer 10 percent to 50 percent more cash than surrendering policies back to the insurer, with payment ranging from 10 percent to 80 percent of the policy’s face value.”

In an actual case example that we highlighted in a previous blog article, the policy seller received a cash settlement for $400,000 for a $750,000 policy.

Are Life Settlements Regulated?

Most states and the territory of Puerto Rico regulate life settlements, affording approximately 90% of the United States population protection under comprehensive life settlement laws and regulations.

Unfortunately, each year more than $100 billion face value of life insurance lapses by seniors over the age of 65 – mostly from a lack of knowledge that an unneeded or unaffordable policy may be sold.

How Common Are Life Settlements?

The life settlement market originated more than 20 years ago. Since that time, thousands of seniors have sold their unwanted policies to institutional buyers operating in the secondary market for life insurance.

Seniors who sell their policies are motivated by a variety of reasons, including the following:

  • Premiums are no longer affordable
  • Children are grown and the policy is no longer needed for income replacement
  • Funds intended to pay estate taxes is no longer relevant
  • Money is needed to pay for medical expenses or long term care
  • Funds are wanted to enhance a retirement lifestyle
  • Cash is needed for an unplanned emergency or to pay off debt

How Long Does the Process Take?

Once you submit a life settlement application to our office, we immediately facilitate the underwriting process with our life settlement broker. This involves ordering your medical records and purchasing life expectancy reports. Following that, your case is submitted to multiple institutional buyers to generate competitive bids for the purchase of your policy. The entire process usually takes approximately 60-90 days before the policy seller receives a lump sum payment.

Who do I call if I have questions?

The staff at Trust Life Settlements would be happy to answer any questions you may have. If you are interested in learning whether you or your loved one qualifies for a life settlement, feel free to contact us at 1-800-216-2513, or explore our website at www.TrustLifeSettlements.com.

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