Every Day,
Seniors Needlessly
Abandon a
Life Insurance
Policy and Get
Nothing In Return
Did You Know…
A life insurance policy can be
converted to pay for Senior
Care expenses
If a policy owner no longer needs, or can no
longer afford their policy, and is considering
letting it lapse or surrendering it for the
remaining cash value, then converting it into a
2013 National Average
Costs Senior Care
Here are three examples of families that
converted their policies into a
Example #1
Gender / Age
Female / 74
Policy Size
$50,000
Policy Conversion
$21,700
$800
24 months
$2,500
Example #2
Gender / Age
Male / 77
Policy Size
$100,000
Policy Conversion
• Nursing Home - $7,000/mo. ..................... $84,000
$45,000
$4,500
• Assisted Living - $3,450/mo..................... $41,400
9 months
• Homecare - $6,384/mo. ............................ $76,608
$4,500
*12 hours per day ($19/hr.)
Genworth Cost of Care Survey 2013
Example #3
Gender / Age
Female / 76
Policy Size
$376,000
Policy Conversion
$105,000
$5,000
20 months
$5,000
The examples above are for illustrative purposes only and do not
constitute a guarantee for other transactions. Source: Life Care Funding
Long Term Care Benefit
Long Term Care Benefit FAQ
Q:
WhatisisaaLong
LongTerm
Term
Q: What
Care Benefit Plan?
A: The Long Term Care Benefit Plan is the
A:
conversion of
conversion
of an
an in-force
in-force life
life insurance
insurance
policy into
policy
into a
a pre-funded,
pre-funded, FDIC
FDIC insured,
insured,
irrevocable Benefit Account that is
professionally administered
professionally
administered with
with tax-free*
tax-free*
payments made
payments
made monthly
monthly on
on behalf
behalf of
of the
the
individual receiving
individual
receiving care.
care. It
It is
is a
a unique
unique
financial option for seniors because all health
conditions are
conditions
are accepted,
accepted, and
and there
there are
are no
no
wait periods,
wait
periods, no
no care
care limitations,
limitations, no
no costs
costs
to
to apply,
apply, no
no requirement
requirement to
to be
be terminally
terminally
ill, and
ill,
and there
there are
are no
no premium
premium payments.
payments. It
It
is not
is
not long
long term
term care
care insurance
insurance or
or a
a policy
policy
loan.
loan. Policy
Policy owners
owners use
use their
their legal
legal right
right to
to
convert
convert an
an in-force
in-force life
life insurance
insurance policy
policy to
to
enroll in the benefit plan, and are able to
immediately direct
immediately
direct payments
payments to
to cover
cover their
their
senior housing
senior
housing and
and long
long term
term care
care costs.
costs.
Key Benefits of the Program Include:
•• Simple,
Simple, no-cost
no-cost application
application and
and
review
review process
process
Q:
Whattypes
typesofoflife
life
insurance
Q: What
insurance
qualify
forconversion
conversion
into
qualify for
into
a a
Long Term Care Benefit Plan?
A:
A: Universal,
Universal, Whole,
Whole, Term,
Term, and
and Group
Group
life
life insurance
insurance policies
policies are
are all
all eligible.
eligible. The
The
value
value of
of the
the conversion
conversion is
is based
based solely
solely
on the death benefit, and cash value is
not
not a
a factor
factor in
in determining
determining the
the converconversion value of a life insurance policy. Q:
Whatforms
formsofofSenior
Senior
Care
qualify?
Q: What
Care
qualify?
A:
A: The Benefit Plan will pay the
following
following monthly
monthly expenses
expenses directly
directly
to
to the
the health
health care
care provider:
provider:
•• Home
Home Care
Care (Family
(Family Caregiver/Private
Caregiver/Private
Duty/Non-medical
Duty/Non-medical or
or Skilled
Skilled Nursing)
Nursing)
•• Independent
Independent Living
Living
•• Assisted
Assisted Living
Living
•• Memory
Memory Care
Care
•• Nursing
Nursing Home
Home
•• Hospice
Hospice Care
Care
Quick approval
•• Quick
approval and
and funding
funding
(no wait
(no
wait periods)
periods)
Q:
Whatdetermines
determines
the
amount
Q: What
the
amount
of of
the monthly Benefit Payment?
No age
•• No
age minimum
minimum
A:
A: The
The conversion
conversion value
value of
of a
a life
life policy
policy
to fund the Long Term Care Benefit is
based
based on
on an
an actuarial
actuarial calculation
calculation that
that
factors the face amount (death benefit) of
the
the life
life insurance
insurance policy,
policy, annual
annual premium
premium
payments
payments and
and the
the health
health care
care needs
needs
of
of the
the applicant.
applicant. Once
Once the
the conversion
conversion
value
value is
is determined
determined and
and the
the enrollment
enrollment is
is
complete,
complete, expenses
expenses will
will be
be paid
paid monthly
monthly
to
to the
the appropriate
appropriate health
health care
care provider.
provider.
No premium
•• No
premium payments
payments
Term, Universal,
•• Term,
Universal, Whole
Whole and
and
Group life
Group
life insurance
insurance all
all qualify
qualify
All types
•• All
types of
of in-force
in-force life
life insurance
insurance qualify
qualify
Monthly, tax-free*
•• Monthly,
tax-free* payments
payments made
made
directly to
directly
to care
care provider/facility
provider/facility of
of choice
choice
Provides tax-free*
•• Provides
tax-free* Funeral
Funeral
Expense benefit
Q: Is the Long Term Care Benefit Plan
a long
longterm
termcare
care
insurance
policy?
a
insurance
policy?
A: Conversion
A:
Conversion of
of a
a life
life insurance
insurance policy
policy into
into
a Long Term Care Benefit Plan is not a long
term care
term
care insurance
insurance policy,
policy, annuity,
annuity, any
any form
form
of
of hybrid
hybrid life/LTCi
life/LTCi policies,
policies, or
or an
an accelerated
accelerated
death benefit it is actually the private market
exchange of
exchange
of a
a life
life insurance
insurance policy
policy for
for a
a
Pre-paid Benefit Plan at the time that care
needs to be paid. There are no premiums
and nothing
and
nothing ever
ever needs
needs to
to be
be paid
paid back.
back.
Q: Is there a Funeral Benefit?
A:
A: Yes, all Benefit Accounts reserve
5% of the death benefit or $5,000,
whichever
whichever is
is the
the lesser,
lesser, to
to provide
provide a
a
tax-free* funeral benefit payment to
the Account’s named beneficiary.
Q:
Arethere
thereany
any
fees
Q: Are
fees
or or
obligations
apply?
obligations totoapply?
A:
A: No,
No, there
there are
are no
no application
application fees
fees and
and
no
no obligations
obligations to
to apply.
apply. Once
Once a
a policy
policy is
is
converted
converted by
by the
the owner,
owner, the
the Long
Long Term
Term
Care Benefit payments begin immedi-ately
ately and
and the
the enrollee
enrollee is
is relieved
relieved of
of any
any
responsibility
responsibility to
to pay
pay any
any more
more premiums.
premiums.
Q:
Howlong
longdoes
doesthe
the
Q: How
enrollment
process
take?
enrollment process
take?
A:
A: The
The typical
typical enrollment
enrollment time
time is
is 30-60
30-60
days.
days. The
The actual
actual time
time to
to complete
complete the
the
process
process will
will vary
vary on
on the
the applicant’s
applicant’s ability
ability
to
to provide
provide the
the necessary
necessary requirements
requirements
for
for review
review such
such as:
as: signed
signed application
application
and
and authorizations,
authorizations, copy
copy of
of life
life insurinsurance
ance policy,
policy, last
last two
two years
years of
of medical
medical
records,
records, and
and offer/enrollment
offer/enrollment packet.
packet.
Q:
Howlong
longdo
doLong
LongTerm
Term
Care
Q: How
Care
Benefit payments last?
A:
A: The
The average
average enrollment
enrollment period
period will
will last
last
between one and two years. The Benefit
is
is adjustable
adjustable so
so an
an enrollee
enrollee can
can customize
customize
the monthly Benefit payments to best
meet
meet their
their changing
changing health
health care
care needs.
needs.
Each
Each case
case is
is unique
unique and
and enrollees
enrollees work
work
with their families, and possibly a financial
or legal advisor, to create a Benefit sched-ule
ule to
to best
best meet
meet their
their monthly
monthly budgets.
budgets.
Q:
Whathappens
happensif if
the
enrollee
Q: What
the
enrollee
dies
beforeallallofof
the
Long
Term
Care
dies before
the
Long
Term
Care
Benefit is paid out?
A:
A: Should
Should the
the enrollee
enrollee pass
pass away
away with
with
additional funds remaining in their Benefit
Account,
Account, the
the remaining
remaining balance
balance is
is paid
paid
tax-free*
tax-free* directly
directly to
to the
the enrollee’s
enrollee’s named
named
beneficiaries. Enrollees and/or their benefi-ciaries
ciaries are
are assured
assured to
to receive
receive the
the full
full BenBenefit amount even if the client dies before
all
all monthly
monthly payments
payments have
have been
been made.
made.
Long Term Care Benefit
Long Term Care Benefit FAQ (cont)
Q:
enrollee
actually
Q:IsIsthe
the
enrollee
actually
transferring
the the
ownership
of
transferring
ownership
of
the
insurance
policy?
thelife
life
insurance
policy?
A:
allall
A: Yes,
Yes,the
theenrollee
enrolleewill
willtransfer
transfer
ownership and beneficiary rights to the
life insurance
insurancepolicy
policytotoenroll
enroll
the
Long
inin
the
Long
Term Care Benefit Plan and will complete
life settlement
settlementworking
workingdirectly
directly
with
a life
with
a a
licensedProvider.
Provider.From
From
moment
licensed
thethe
moment
thethe
Benefit Plan is established, the Benefits
Administratorwill
willbegin
beginmaking
makingmonthly
monthly
Administrator
paymentsto
tothe
theappropriate
appropriatehealth
health
care
payments
care
provider as
aswell
wellasasallall
future
premium
provider
future
premium
payments
onthe
thelife
lifeinsurance
insurance
policy.
payments on
policy.
The enrollee
enrolleeisisno
nolonger
longerresponsible
responsible
The
forfor
paymentsand
andthe
thepolicy
policy
is no
premium payments
is no
consideredananasset
asset
that
count
longer considered
that
willwill
count
againstthem
themfor
forfuture
futureMedicaid
Medicaid
eligibility.
against
eligibility.
Q: How is a Long Term Care Benefit
Account
administered
Account
administered
andsafe-guarded?
safe-guarded?
and
A: The Benefit Plan is an irrevocable; FDIC
A:
insured account
accountheld
heldbyby
a nationally
char-insured
a nationally
char
Bank&&Trust
Trust
and
then
administered
tered Bank
and
then
administered
by a licensed, benefit management com-pany ensuring
ensuringthat
thatthe
thefunds
funds
are
protected
pany
are
protected
onlyused
usedfor
forthe
therecipient
recipient
care.
and only
of of
care.
TheThe
accountalso
alsohas
hasthe
the
added
protection
account
added
protection
the enrollee
enrolleeofofpaying
payingany
any
remaining
for the
remaining
balance to a named account beneficiary
and/or providing a final expense benefit
help cover
coverfuneral
funeralexpenses.
expenses.
to help
Q:Which
Which
states
Q:
states
can acan a
policybebe
converted?
policy
converted?
A: A life
life insurance
insurancepolicy
policyowner
owner
has
A:
has
thethe
propertyownership
ownershipright
righttotoconvert
convert
legal property
their policy into a Long Term Care Benefit
Plan
inevery
everystate
stateininAmerica.
America.Q:
How
Plan in
Q: How
does
converting
life policy
does converting
a lifeapolicy
impact impact
an
enrollee’s
eligibility
for Medicaid?
an enrollee’s
eligibility
for Medicaid?
A:
A life
life insurance
insurancepolicy
policy
legally
A: A
is is
legally
recognized
asananasset
asset
policy
owner
recognized as
of of
thethe
policy
owner
and itit counts
countsagainst
againstthem
them
when
qualify-when
qualify
ing for
for Medicaid.
Medicaid.If Ifa a
policy
anything
policy
hashas
anything
more than
thanaaminimal
minimalamount
amountofofcash
cash
value
value
(usually
inthe
therange
rangeofof$2,000)
$2,000)
it must
(usually in
it must
be be
liquidated
andthat
thatmoney
moneyspent
spent
towards
liquidated and
towards
cost
ofcare
carebefore
before
the
owner
qualify
cost of
the
owner
willwill
qualify
for Medicaid.
Medicaid.All
AllMedicaid
Medicaid
applications
applications
specifically ask if the applicant owns
life insurance
insuranceand
andfull
fullpolicy
policy
details.
details.
Failure
todisclose
discloseand
and
comply
is fraud.
Failure to
comply
is fraud.
Some states allow for a final expense
policy
tobe
bekept
keptorortransferred
transferred
policy to
to to
a a
funeral home
home(but
(butthe
thefuneral
funeralhome
homewould
would
keep the entire death benefit). Medicaid
recovery
unitshave
havebecome
become
much
more
recovery units
much
more
forceful
aboutlooking
lookingfor
forlife
lifeinsurance
insurance
forceful about
policy death benefits (declared and
undeclared)
thathave
havepaid
paidout
out
families
undeclared) that
toto
families
after the
the death
deathofofaaMedicaid
Medicaid
recipient.
recipient.
Medicaid
budgetsare
arenow
now
facing
extreme
Medicaid budgets
facing
extreme
pressure
andasset
asset
recovery
efforts
pressure and
recovery
efforts
cancan
be very
veryaggressive.
aggressive.
Recovering
entire
Recovering
thethe
entire
cost
ofcare
careagainst
against
a retained
insur-cost of
a retained
lifelife
insur
ance
policythrough
throughlegal
legalactions
actions
against
ance policy
against
the estate
estateand
andsurviving
survivingfamily
family
pursuing
byby
pursuing
the death benefit through probate action
is aafederally
federallymandated
mandated
requirement.
requirement.
by the Deficit Reduction Act (DRA).
The Long Term Care Benefit Plan are
all “private
“privatepay”
pay”funds
funds
and
recognized
and
recognized
as a qualified spend-down of the policy
asset,
because
the
proceeds
in the
form
asset, because
the
proceeds
in the
form
of an irrevocable, Benefit are paid to
cover
thecosts
costsofof
care
until
exhausted.
cover the
care
until
exhausted.
A partial death benefit is preserved
over this
thisspend-down
spend-downperiod
period
and
and
a a
final expense funeral payment is also
preserved. Once the Benefit has been
spent-down,
theenrollee
enrolleewould
would
able
spent-down, the
bebe
able
to apply
applyfor
forMedicaid
Medicaidwithout
without
the
the
lifelife
insurance
assetcounting
counting
against
them.
insurance asset
against
them.
Q:
Does
policy
Q: Does
thethe
policy
ownerowner
get
good
value
get aagood
value
withwith
a Longa Long
Term Care Benefit Plan?
A:
Seniorslapse
lapseoror
surrender
a life
A: Seniors
surrender
a life
insurance
policybecause
because
they
either
insurance policy
they
either
cancan
no longer
longer afford
affordpremium
premiumpayments
payments
oror
they are
arepreparing
preparingfor
forMedicaid
Medicaid
eligibility
eligibility
and they
theyabandon
abandonthe
thepolicy
policy
because
because
it is an unqualified asset that will count
against
them.For
Fora apolicy
policy
owner
looking
against them.
owner
looking
for an
an alternative
alternativetotoabandoning
abandoningtheir
their
policy
andaccessing
accessing
private-pay
dollars
policy and
private-pay
dollars
for Senior
SeniorCare;
Care;the
the
option
convert
option
to to
convert
their life insurance
insurancepolicy
policyinto
into
a Long
a Long
Term Care Benefit Plan will allow them to
realize
thetrue,
true,fair
fairmarket
market
value
their
realize the
value
of of
their
policy
andspend
spendit itdown
down
tax-free*
policy and
tax-free*
in ain a
Medicaid
compliantmanner.
manner.
long
Medicaid compliant
AsAs
long
as as
the individual
individual remains
remainsprivate
privatepay
pay
they
they
can
choosewhichever
whichever
form
long
term
can choose
form
of of
long
term
care
theydesire
desireand
and
are
constrained
care they
are
notnot
constrained
to only
only receive
receiveMedicaid
Medicaid
covered
services.
covered
services.
ViViveré
veré
Alternative
Assets
Alternative
Assets
Tel: (312)
600-8576
Tel: (312)
600-8576
Fax:
(855)
672-8210
Fax: (855) 672-8210
E-mail:
[email protected]
E-mail: [email protected]
320 West Ohio Street #3W
320 West Ohio Street #3W
Chicago, IL 60654
Chicago, IL 60654
*Please
treatment
of of
thethe
proceeds
fromfrom
the sale
a life
policy will
depend
on manyonfactors,
but not limited
to who
owns
the policy,
*Pleasenote
notethat
thatthe
thetax
tax
treatment
proceeds
the of
sale
of insurance
a life insurance
policy
will depend
manyincluding
factors, including
but not
limited
to who
ownsthe
thehealth
policy, the health
of the insured, the use of proceeds, the size of the estate and the state in which the policy owner lives (for purposes of state taxation). This material does not constitute tax, legal
or accounting advice; and it cannot be used by any taxpayer for the purpose of avoiding any IRS penalty. Anyone interested in selling a life insurance policy in order to fund Long
Term Care Benefits should seek professional advice based on his or her particular circumstances from an independent tax advisor.
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