Insurance Options for Paying for Senior Living

Insurance Options for Paying for Senior Living

When considering what financial resources will be available to you for your future care needs, you might not have realized that using your insurance for senior living is something to consider. If you have it but aren’t sure how to use it, here’s a look at a few options.

Your future care needs and how insurance can help

If you’re in pretty good health now and are living independently, you might wonder if you really need long-term care insurance, or if using other insurance for senior living is even an option.

Think back to earlier periods of your life when you purchased various types of insurance, such as car insurance, homeowners’ insurance or health insurance. You did it to give you security and peace of mind for what might come.

When considering using insurance for senior living, in particular for long-term care, it’s the same idea: you’re giving yourself peace of mind. Consider these statistics:

  • 7 out of 10 Americans over 65 will need long-term care, and an estimated 20% of Americans will need it for longer than 5 years.
  • According to the Genworth Cost of Care Survey, the average cost of a month in a nursing home in the United States is $8,910.
  • A person turning 65 years old today will end up paying $120,900 for long-term care, as well as another $204,000 worth of unpaid care from their families. That means, on average, $324,000 in care.

When you consider that the average baby boomer has saved approximately $202,000 for retirement, it’s easy to see why having insurance you can use for long-term nursing care might be a viable option.

Download our Financial Planning for Retirement Living Guide.

Types of insurance for senior living:

Long-term care insurance

Long-term care (LTC) insurance helps to pay for the cost of home care, adult day care, assisted living, memory care, skilled nursing, respite care and hospice by covering services typically not covered by health insurance, Medicare or Medicaid. Policies often even cover some homemaker services, such as meal preparation or housekeeping as long as it is in conjunction with the personal care services you receive.

  • Buying it earlier is better. Long-term care insurance is an option to consider before you or a family member reaches an advanced age and is still in relatively good health. Many people are put off by the high cost of long-term care insurance and delay purchasing a policy—even though paying the expense early allows you to lock in lower rates. According to Investopedia, experts recommend seeking long-term care insurance between the ages of 60 and 65 to balance these concerns.
  • Know when benefits begin. Many LTC policies will start benefits once an assessment has determined you need help with two or more activities of daily living or cognitive impairments—known as a benefit trigger. Once the insurance company approves a Plan of Care, you will have an elimination period of 30, 60 or 90 days after the benefit trigger occurs before you start receiving payment. During this time, you must cover the cost of services you receive. Once the benefits begin, many policies pay your costs up to a pre-set daily limit until your lifetime maximum is reached.

Life insurance conversion

Another way to use insurance for senior living is through conversion. Many people who own a life insurance policy are unaware they can convert some types of policies into a long-term care benefit plan. This conversion process transfers ownership of the life insurance policy from the owner to an entity that acts as a benefits administrator. Regular payments are made directly to a long-term care provider, so there must be an immediate need for long-term care (including assisted living).

The details:

  • Since the owner no longer holds the policy in his or her name, the asset will not count against them in the Medicaid spend-down process. With life insurance conversion, all health conditions are accepted. There are no wait periods or care limitations. No costs to apply, no requirement to be terminally ill and no premium payments. And converting a life insurance policy into care services provides a higher return than the cash surrender.
  • Many types of life insurance policies can be converted, including whole, universal or term.
  • Money from the policy can be used to pay for any kind of care: home care, assisted living, skilled nursing and hospice.
  • There are no obligations or fees to apply, and the typical enrollment period is 30 to 45 days.
  • Once a policy is converted by the owner, the long-term care benefit payments begin immediately, and the enrollee is relieved of any responsibility to pay any more premiums.

Take your time

Do your homework on all the financial resources available to you and be sure to include the option of using insurance for senior living costs.

Senior living, the LSS Senior Living way

At LSS Senior Living, our goal is to offer seniors quality care and comfort in a friendly and warm environment that feels like home. We offer a continuum of services to lend a helping hand when you need them. Find out more about our communities:

LSS Kensington Place

LSS Lutheran Village

LSS The Good Shepherd

Speak to an advisor today, we’re here to help! To learn more, download our Financial Planning for Retirement Living Guide.

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