Alternative Asset Based Funding For Long Term Care: Long Term Care Life Settlements
May 3, 2022 by Chris Orestis, CSA
Long term care life settlements first emerged in the insurance secondary market 15 years ago as an offshoot of traditional life settlements. An overlooked asset owned by millions of seniors came into focus by care providers, political bodies, Medicaid departments, advisors, and policy owners as the realization that life insurance policies are personal property of the owner—but millions of dollars’ worth was being abandoned by seniors every year.
Typically, the owner of a life insurance policy experiencing the loss of two or more activities of daily living (ADLs) will be confronted with the choice of surrendering or lapsing a life insurance policy if they no longer need or can no longer afford to keep their policy in force. As an alternative to abandoning their policy after years of making premium payments, they can elect to pursue the sale of their policy through a life settlement and then could use the funds in a tax-advantaged manner towards long term care needs depending on their medical condition.