Often overlooked as a sound option that can help pay for senior living, life settlements are worth investigating as you consider your possible funding sources.

With life settlements, you are selling your life insurance for cash which can be used to pay for senior living.

Here is a definition as well as important points to remember from Retirement Genius:

• A life settlement is the sale of an existing life insurance policy (typically by seniors) to a buyer (typically a broker or investor) who takes over the monthly premium payments while the insured person is still living. 

In exchange for relinquishing their right to pass down the policy’s death benefit, the seller of a life insurance policy receives compensation on average four times greater than the policy’s cash surrender value, but less than the full death benefit. In certain cases, the proceeds may be tax-advantaged and can be used towards paying for retirement expenses, medical bills, long-term care, or anything else you wish—it’s your money to use however you choose.

With a life settlement, you can take advantage of your highest-valued assets without worrying about transaction or application fees and taxes.

A few points about life settlements to keep in mind:

• Life settlements provide a higher fair market payout than you would receive from cancelling your policy or letting it lapse. A policy generally must exceed $50,000.

• You can use funds from the policy sale however you choose, including to pay for senior living. Monies are put in an irrevocable trust that makes payments to the senior living community. Families can set aside a certain amount for inheritance and decide how much to allocate for care.

• Life settlements allow you to lower your monthly retirement expenses by removing the burden of high monthly premiums

• Any type of policy—term, universal, whole—with a death benefit of $100,000 or more is eligible. There is no maximum death benefit.

Remember, there are lots of funding options out there. Start by making a plan.

A plan is always a good idea when you are facing a big decision or a choice that will affect your future for years to come. A plan that helps you find a way to pay for senior living can get you started in the right direction, target your research, and give you the background you need to carefully consider all your options.

Many people don’t realize just how many options they have. If you conclude from the start you can’t afford to pay for senior living, you might miss out on the opportunity to give yourself, or a loved one, an exceptional lifestyle filled with care, companionship, and comfort.

And just to clear the air on Medicare and Medicaid:

1. Medicare covers a stay of up to 100 days in a nursing home. The community must be certified by Medicare, and your parent must meet other eligibility options. Medicare does not cover the cost of assisted living facilities or any other long-term residential care, such as nursing homes or memory care. Medicare-covered health services provided to assisted living residents are covered, as they would be for any Medicare beneficiary in any living situation.

2. Medicaid is required by Federal law to cover home care services for seniors who are blind or who have another disability that limits functioning. Some states also cover care in personal care homes. Medicaid covers Medicaid-eligible nursing homes for seniors who meet other eligibility requirements. To gain access to Medicaid, you generally must show that your parent has little or no funds. That may require you to first exhaust other options, such as selling a home.

We are here to help you. Whether you have questions about life settlements or any of the other available funding options, or if you want more information on senior living, PMMA (Presbyterian Manors of Mid-America) is eager to assist you. We believe all seniors deserve to feel valued, and to live in safety and comfort.

At PMMA, our faith-based approach to care and promise of service are infused into everything we do and all that we are. Contact a community near you to learn more and to schedule your personalized tour.