After discovering the many advantages of senior living, families often begin finalizing plans to make a community the best home for their loved ones. Along with private and accessible residences, healthy and delicious dining, plus the monthly activity and social events, they’ll receive the support needed to live their highest quality of life.
A significant role when preparing for this transition is to get the finances in order. Locating resources is the first step when planning on how best to fund senior living expenses.
The good news is that families are often surprised to discover how many financial options there may be. Using insurance to cover senior living costs is often one overlooked source.
Insurance Options for Funding Senior Living
If your loved one has a life insurance policy, you may discover several alternative senior living funding choices. Consider the following options that may be available to your family:
Option #1: Selling a Life Insurance Policy
Each specific policy can have different terms or restrictions so you’ll want to confirm what is allowed. However, two possibilities might include:
Life settlement: An individual may decide to sell the policy for its cash value and use this money to pay for long-term care. Families will want to verify any restrictive qualifications as well as ensure they understand there will be no benefits available for heirs after the sale.
Viatical settlement: This is another option to receive money from selling a policy but is typically allowed only if the policy’s owner is terminally ill and has a life expectancy of two years or less.
Option #2: Converting a Life Insurance Policy
A life insurance policy may be eligible for conversion in order to create funds that can contribute toward financing long-term care. Ownership will be transferred to a benefits administrator who will make payments directly for the senior living expenses. The amount available will be determined by the value of the policy.
In order to qualify for conversion, most policies will require there be an immediate need for senior care. The amount of money available will typically be more than the cash surrender value but less than the face value of the policy.
Download our complimentary information, A Family Guide to Funding Senior Care & Housing.
Option #3: Taking Out a Loan Against the Policy
Your loved one’s insurance policy may allow for a living benefit to be set up. This can provide a percentage of the death benefit to become available to pay toward expenses for senior living.
However, it’s important for families to realize that the loan will accumulate interest if they take advantage of using this insurance option for senior living. If not previously repaid, the amount of the loan and interest will be subtracted before payment is received by the beneficiaries.
Option #4: Funding a New Policy
Another alternative for using an insurance policy to fund senior living is a 1035 Exchange. This allows the policy holder to take the cash value of the life insurance policy to purchase a long-term care policy, if certain qualifications are met.
This option can be popular because it doesn’t trigger any tax responsibilities that might result from selling the policy, including if there had been a gain in the value from the amount of premiums paid.
Option #5: Using Long-Term Care Insurance
If your loved one has already purchased a long-term care insurance policy, this is another option that can be used to reimburse the expenses for senior living. However, if a policy has not yet been activated, it may no longer be a choice as individuals typically won’t qualify for coverage if care is already needed or they are over a certain age.
Long-term care insurance policies pay for residential care and assistance with daily tasks but there can be specific restrictions. Generally, benefits are paid if the individual is living with dementia or is unable to perform at least two activities of daily living such as bathing safely, grooming, dressing or transferring from a bed to a chair.
Retirement living in Wadsworth, Illinois
Galloway Senior Living, locally owned and operated, provides luxury and quality care for families in our community.
Assisted Living at Galloway Senior Living offers beautiful and contemporary private residences that range from alcove studios to two-bedrooms and include high-end stainless-steel appliances, maple hardwood cabinets, cultured marble countertops and thoughtfully curated décor and colors.
Our Memory Care community offers a family kitchen, dining room, walking garden, and lounge.
Our services include:
- 24-hour certified nursing assistants, on-staff licensed nurses, medication management, and on-site physician visits
- COVID-19 safety protocols
- Assistance with daily tasks
- Readily available safe transportation
- A fall-reduction program
- In-unit emergency response systems including an electronic monitoring system for exit doors
- On-site entertainment and activities personalized to reflect the residents’ preferences
- Housekeeping and linen services including personal laundry
Amenities you’ll find at Galloway Senior Living include:
- Country Café and Convenience Store
- Salon and Spa
- Theater with 85” television
- Activity and Craft Center
- Game Room
- Library and Business Center
- Fitness Center
If you or your family is considering retirement living in Wadsworth, Illinois, we hope you will visit our community at Galloway Senior Living. We are a trusted resource and are here to answer any questions.
We also invite you to download our complimentary information, A Family Guide to Funding Senior Care & Housing.