It’s no secret that financing long-term care is becoming a massive problem for America.
Although 70% of Americans over the age of 65 are likely to need long-term care at some point during their lives, only about one in ten own long-term care insurance which funds only about 4% of long-term care expenditures. At the same time, fewer and fewer companies are writing traditional long-term care insurance, and the price of long-term care insurance keeps rising.
Medicare and private health insurance provide minimal coverage for long-term care. Medicaid (which is co-funded by the states and the federal government) ultimately pays for the vast majority of long-term care expenses in this country, but to qualify for Medicaid one needs to basically go broke. Not surprisingly, paying for long-term care is Medicaid’s single largest expense. And the costs can only grow as the baby boomers age.
It was with this background that the Long-Term Care Innovations Subgroup of the National Association of Insurance Commissioners (NAIC) recently adopted a study which examined the state of long-term care in this country. The subgroup concluded that one of the viable options to privately fund long-term care costs could be a life settlement. Yes, sometimes money derived from a life insurance policy can provide more benefit while the insured is alive than after death.