Selling a life insurance policy to a purchaser to obtain income is another option. There are two types of settlements:. When a person has a shortened life expectancy, he sells the life insurance policy at a lower price than the policy's death benefit but greater than the cash surrender value. The purchaser takes over paying the premiums and becomes the owner of the policy.
The person selling the policy does not have a limited life expectancy. Life settlements are common for older individuals who have some life-shortening health condition. An excellent source of information on this option is the Life Insurance Settlement Association.
LTC insurance pays for services received in facilities like nursing homes and assisted living. The policy also pays for activities of daily living ADLs services received at home.
If you don't have a long-term care insurance policy, an individual can make a lump-sum payment to buy one. The payment depends on the age and amount of the deposit before calculating a monthly benefit.
It requires an initial life insurance benefit that decreases over time. After five years, if you haven't filed a claim for a monthly benefit, you can get the investment back. An equity line of credit or home equity line of credit. If you have equity in your home, you can use that cash to pay for the retirement community entrance fees and senior housing costs.
If you or your spouse is a veteran active at least 90 days where just 1 of those days was during a period of war you are potentially eligible for a benefit to help them pay for assisted living. It's called the Aid and Attendance Benefit and it's offered by the Veterans Administration which allows for Veterans and surviving spouses who need the help of another person for regular attendance to assist in eating, bathing, dressing, undressing, taking medication, or needing help with toileting to obtain financial benefits.
The Aid and Attendance include care received in assisted living facilities, nursing home, or at home, and it applies to persons who are blind. Thanks to recent federal and state government programs, a senior can qualify for financial help for Medicaid.
It offers programs to help pay for assisted living. Each state has individual rules, regulations, and eligibility requirements. Be aware of other considerations:. Plan for possible coverage gaps. You or your parent could wait up to six months for the payments from a long-term-care insurer to start. If you need to cash in a CD early, your bank might waive the early withdrawal penalty for an urgent need such as entering assisted living.
You can write off the cost of care. Once the total medical expenses exceed 10 percent of adjusted gross income, you can deduct the remainder from federal income taxes for the resident. Deductible medical expenses can include long-term-care insurance premiums and the medical services provided within the facility itself. To maximize the deduction, pay for assisted living with the taxable distributions from retirement accounts, advises Michael Keeler, a certified financial planner at Peak Financial Solutions in Las Vegas.
I cover the money side of home-related purchases and improvements: avoiding scams, making sense of warranties and insurance, finding the best financing, and getting the most value for your dollar. For CR, I've also written about digital payments, credit and debit, taxes, supermarkets, financial planners, airlines, retirement and estate planning, shopping for electronics and hearing aids—even how to throw a knockout wedding on a shoestring. I am never bored.
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Also you need to factor in the cost of future health care. You can get an idea of how much different levels of care can cost you now, and a few years from now, at the Genworth Cost of Care Survey. So, can you afford senior housing? The best way to find out is to do the math. This costs worksheet will help you get started:. Download The Costs Worksheet. There are others, but these situations just mentioned place an immediate draw on private funds.
When the money runs out where should you turn for financial help? Professional financial advice is always a good start in helping you make the right decision. A financial advisor can recommend options based on personalized knowledge of your assets. Choose from these resources:.
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