It’s a fact: Alzheimer’s disease is one of the costliest chronic diseases in our society. With the month of June having been declared “Alzheimer’s & Brain Awareness Month” by the Alzheimer’s Association, this is also an appropriate time to discuss how many families are turning to life settlements to help fund residential care for their loved ones suffering from Alzheimer’s and other forms of dementia.
Due to the expense associated with long-term care insurance premiums, many patients are entering nursing homes without insurance coverage for long-term care. As a result, many families pay for residential care expenses — averaging $78,000 per year — out of their own pockets.
As the costs for nursing home care for patients suffering from dementia continue to skyrocket, millions of seniors and their families are challenged to find sources of money to pay for quality care.
That’s why it’s so important for consumers and insurance advisors to explore all options as they relate to leveraging the value of life insurance policies. Many consumers are still not aware of the existence of the secondary market for life insurance and that life settlements have helped many seniors and their families pay for medical expenses and nursing home expenses.
We believe the most effective way to illustrate the financial problem-solving capacity of life settlements is to share an actual case example that was recently brokered by the viatical and life settlement specialists at Asset Life Settlements.
Case summary: Alzheimer’s patient received $600,000 from life settlement
This case involved the sale of a $1 million life insurance policy on a 64-year-old male with Alzheimer’s. The policy was a nonconvertible term policy with annual renewable term (ART) premiums that had been increasing for the past two years.
The patient, whom we’ll call Mr. X, required 24-hour-care. His family had been struggling for the past several years to pay for his nursing home care and other medical expenses. After tapping their life savings, the family was about to give up hope when they sat down with their insurance advisor to review all possible options.
The agent explained that given Mr. X’s medical condition and life expectancy, he would likely qualify for a life settlement. The family agreed and Asset Life Settlements brokered the transaction in pursuit of the policy’s fair market value in the secondary market.
After obtaining the patient’s medical records and life expectancy reports, Asset Life Settlements submitted the case to multiple institutional funding sources. After receiving a series of bids, the agent representing the family accepted the highest settlement proposal of $600,000. The family was grateful that they were able to use the proceeds to finance the premiums for the patient’s remaining life insurance coverage, as well as receive reimbursement for their out-of-pocket contributions to the patient’s care for the last several years.
What about Medicare and Medicaid to help with nursing home expenses?
Some consumers are under the mistaken impression that Medicare will help pay for long term care for Alzheimer’s, but that is not the case. Medicare, the federally funded health insurance program for seniors, covers inpatient hospital care and some of the doctors’ fees and other medical items for people with Alzheimer’s or dementia who are age 65 or older.
Medicare Part D covers many prescription drugs. While Medicare will pay for up to 100 days of skilled nursing home care under limited circumstances, it does not pay for custodial long-term nursing home care. Medicaid, a program funded jointly by the federal and state government and administered by each state, is only an option if the patient has very low income and asset levels.
Resources for consumers to learn more about life settlements
While the secondary market for life insurance has been in existence for more than 20 years, those of us in the industry are committed to doing more to broaden consumer awareness that a life settlement is often a viable solution for cash to pay for long-term care and other medical expenses.
Many insurance advisors and their clients may not know that life settlements are recommended by a number of national organizations and agencies. We suggest exploring our website to learn more about the qualification factors for a life settlement. In addition, a number of other websites offer information about life settlements, including:
- Federal Government Long-Term Care Website. The U. S. Department of Health and Human Services endorses life settlements to help finance long-term care expenses. Visit their website here.
- American Cancer Society. The Society’s website provides information about accessing the value of one’s life insurance policy through a life settlement to help pay for medical expenses related to cancer treatment.
- A Place for Mom. Featuring former TV anchor/host Joan Lunden, this website is a free resource that helps seniors, families, moms and dads find assisted living facilities, dementia care, Alzheimer’s, memory care, and nursing homes. The website also discusses sources of funds to care for patients, including life settlements.
- A life insurance policy is an asset that can be sold. The Life Insurance Settlement Association is the official membership organization representing the industry and is a source for consumers to learn more. Visit their website here.
Always insist on multiple bids to obtain the policy’s fair market value
The ultimate objective for any life settlement transaction should be to obtain the policy’s fair market value. Agents and consumers should work with a life settlement broker who can submit the case to multiple funders in the secondary market in pursuit of the highest possible offer.
Jeff Hallman is a co-founder and managing partner at Asset Life Settlement LLC. He began his career in life settlements in 2001 and since then has negotiated transactions valued at about $2 billion in face value. He has been involved in case submission, underwriting, compliance, the institutional bidding process, life expectancy analyses and contract negotiation in the life settlement market. He can be reached at firstname.lastname@example.org or 888-335-4769 x1108.
Scott Thomas is a co-founder and managing partner at Asset Life Settlements LLC. He began his career in the life settlement industry more than 15 years ago and has since transacted about $2 billion in policy face value. He has worked on transactions involving multimillion-dollar policies involving complex estate plans. He can be reached at email@example.com or 888-335-4769 x1115