Life Settlements and Long-Term Care

While recently taking a continuing education course required for long-term care insurance licensing renewal, we were pleasantly surprised to find that life settlements were cited as a possible source of funds for long-term care expenses.

Although we’ve taken these courses for many years to maintain our licenses, this was the first time that life settlements were mentioned by one of them. Not only was it covered in the course content, but two of the 25 test questions were on life settlements!

(Related: The Life Settlement Market Grew Significantly in 2018. Did You Participate?)

It is gratifying to see that life settlements are finally being acknowledged as a meaningful way to fund long-term care expenses. We’ve written about and suggested this for years. For a person requiring long-term care, especially with a chronic or terminal illness, a life settlement is certainly an option to be considered.

Normally, with a significant illness, the last thing a policy owner wants to do is give up a life insurance policy that is apt to pay a death benefit in the not too distant future. Any other source of funds, including borrowing, is likely to be a better choice than a life settlement because the ultimate life insurance death benefit has the potential to be much larger than the proceeds of a life settlement.

But in many long-term care and significant illness situations, there is no alternative source of funds.  Sometimes waiting for the death of the insured is not possible when money is desperately needed in the here and now for medical and long-term care expenses.