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Insurance Options for Paying for Senior Living

Have you considered all the advantages of a senior living community? If you’re like many older adults, you may have already made the decision to achieve an easier and possibly more fulfilled life that will also provide the assistance you need. 

If so, now may be the time to research which funding sources are available for your new life. 

Most families are surprised to discover there are more options than they originally thought. An often overlooked resource overlooked is potential insurance available for senior living expenses. 

Funding sources: Insurance for senior living 

Depending on your specific situation , the following insurance options may be available to pay toward a community life: 

Insurance for senior living option 1: Selling a life insurance policy 

Policy restrictions can vary widely so it’s important to confirm specifics when considering whether selling a life insurance policy could help fund senior living expenses.  

Two possibilities include: 

a. Life settlement: a policy may allow for selling and using the proceeds to contribute to senior living care. There may be age restrictions in order to qualify and there won’t be a death benefit available for heirs. 

b. Viatical settlement: this option also provides cash from selling the policy but may only be available if the policy owner is terminally ill and has a life expectancy of typically two years or less. 

Insurance for senior living option 2: Converting a life insurance policy  

A life insurance policy may be eligible for conversion to a long-term care benefit by transferring ownership to a benefits administrator. The administrator will directly make payments for senior living care in an amount determined by the value of the policy. 

One restriction is that there would need to be an immediate need for senior care in order to complete the conversion. The value is often worth more than the cash surrender value but less than the face value of the policy. 

Insurance for senior living option 3: Taking a loan against a life insurance policy 

Some insurance policies allow for a living benefit to be set up to provide a percentage of the death benefit to pay toward senior living expenses.  

It’s important for families to understand that taking advantage of this insurance for senior living will result in a loan that will accumulate interest. The final amount due will be subtracted before any payout is made to your beneficiaries. 

Insurance for senior living option 4: Funding a new policy 

Another option to contribute to funding senior living expenses is a 1035 Exchange. This allows you to take the cash value from your current life insurance policy to directly purchase a long-term care policy, if you qualify. 

One advantage to this option is that it doesn’t trigger any tax responsibilities that may arise from selling your life insurance policy, such as if there had been a gain in value from the amount of premiums that were paid. 

Insurance for senior living option 5: Using a long-term care insurance policy 

If you or your loved one has previously purchased a long-term care insurance policy, this can be used to reimburse the cost of senior living. If such a policy hasn’t yet been purchased, it may no longer be an option as typically individuals don’t qualify for coverage if care is already needed or if they are over a certain age. 

Long-term care insurance policies do pay for residential care and assistance with daily tasks, but it’s important to verify the specific restrictions to a policy. These may include whether you or a loved one is living with dementia or is unable to perform at least two activities of daily living such as bathing, dressing, eating or transferring from a bed to a chair. 

Life at a Milestone Community 

If you’re looking at options for retirement living, we invite your family to visit one of our Milestone communities – designed to support your loved ones to live their highest quality of life. 

We offer studio and one-bedroom private apartments for our assisted living residents as well as private or shared memory care suites for those living with Alzheimer’s or dementia. 

Our memory care residents are cared for by our compassionate and specially trained team – who meet them wherever they are in their journey with patience and kindness. The residents also have access to customized activities, programs and an elevated secured courtyard. 

Our amenities and services encourage our residents in assisted living to engage with others, remain as independent as possible and be reassured that help is available whenever needed. 

In addition to our personalized services, we offer: 

If your family is considering retirement living, we hope you will visit one of our communities. We are a trusted resource and are here to answer any questions. Please contact us with any questions you may have or to arrange a personal tour.