Key Takeaways
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Senior care can be expensive, but life insurance policies may offer options to help seniors pay for long-term care.
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There are different types of life insurance policies, including hybrid, term, and whole life insurance.
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Strategies may vary depending on your unique situation and could include selling the policy or taking out a loan against it.
- Using life insurance to pay for care can be complicated, so it’s best to always consult a financial expert before making changes to your policies.
1. Sell a policy for a life settlement
With a life settlement, a policy holder sells their life insurance policy to a third party for market value and uses the proceeds to fund a long-term care benefit plan. Any type of life insurance — permanent with cash value, group insurance offered through an employer, even term life — can be used. However, most companies specializing in these transactions require a minimum death benefit of $50,000.
It’s best to delay a life settlement until one actually needs long-term care, says Nicole Gurley, owner of Gurley LTCI, a brokerage company specializing in long-term care funding solutions. “Generally, the shorter the life expectancy, the larger percentage of the death benefit will be paid to the insured,” Gurley explains.
For example, if someone with a $100,000 death benefit is 90 years old and needs long-term care, they could sell the policy and possibly receive as much as $60,000 of the death benefit. That amount is deposited in an FDIC-insured, irrevocable bank account and professionally managed by a licensed benefit management company. The administrator then makes payments directly from the bank account to the home care agency, assisted living facility, or the skilled nursing community providing long-term care.
2. Set up a living benefit program
A living benefit program is a lump sum payment that’s available to people who meet specific medical criteria. A living benefit program makes it possible to receive up to 50% of a life insurance policy’s death benefit while still reserving some death benefits for the family. For example, if your loved one has $200,000 in coverage, it could be possible to secure up to a $100,000 living benefit. They don’t lose their entire life insurance and their beneficiaries remain. With their cash advance, they can pay for their senior care expenses.
To qualify for a living benefit program, one must have a life insurance policy with a death benefit of at least $100,000 in most cases. There is no other asset required, and credit history won’t be checked. Additionally, there are no out-of-pocket expenses. It is important to note a living benefit is essentially a loan against the policy. The entire loan, including any interest, must be repaid or it will be deducted from the death benefit of the policy. Following the death of the insured, the difference between the loan and the death benefit will go to the named beneficiaries.
A living benefit program works with all types of life insurance policies, including the following:
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Term policies
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Universal policies
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Whole policies
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Group policies
Keep in mind that loan proceeds are not taxable, and interest rates can vary depending on the state. Make sure to check with your loan provider for your specific interest rates.
A copy of the insured’s medical records and a recent life insurance policy statement are required to approve the loan. Once approved, funds may be disbursed in as little as three weeks from the date of application. Going forward, life insurance premiums may be waived. Additionally, the policyholder cannot be held personally liable for the loan.
3. Surrender the life insurance policy for cash value
When a policy owner “surrenders” a life insurance policy to the insurance provider, they give up ownership and the death benefit. If the policy has accumulated cash, the insurance company writes a check for the full amount of cash value. In many cases, taxes must be paid on that amount — but not always.
“If the cumulative premium amount paid over the life of the policy is more than your current cash value, there are generally going to be no taxes,” Sam Price, an independent life insurance broker and owner of Assurance Financial Solutions. “However, if you’ve had the policy for several years and the cash value has grown beyond the premiums paid into the policy, then you’re going to owe taxes on the gain.”
Many companies differentiate between “cash value” and “surrender value,” so those amounts may differ in the policy’s early years. Insurance companies may penalize a policyholder who surrenders a policy early on.
Also, if your loved one plans to use Medicaid to pay for long-term care, the cash portion of their life insurance policy — or the amount they’d receive when surrendering the policy — can be considered an asset and count against them for Medicaid eligibility.
“Generally, permanent policies with cash value can count toward Medicaid eligibility when the death benefit is more than $1,500,” says Price.
Term life insurance, which has no cash value, won’t count toward Medicaid eligibility.
4. Take a loan from cash accumulation
If your loved one takes a loan from their life insurance policy’s cash value, they won’t have to pay taxes on it. They can’t take it all, though, or the policy will lapse. However, a policy holder can usually take most of the cash value in a loan that they then pay back to themselves with interest.
“If your health care needs are more than the money you have in the policy, you’re going to surrender the policy because you need every dollar,” says Price. “However, if your needs are less than the amount of cash value, then a loan might make more sense. That way, you can keep some portion of the death benefit in place.”
5. Use cash value to fund a new long-term care policy
If there’s time to plan, your loved one may be better off doing what’s known as a 1035 exchange. This exchange involves using one insurance policy’s cash value towards a new policy without first cashing out and risking tax exposure.
A tax-free 1035 exchange also allows a policyholder to use an existing life insurance policy’s cash value toward a new life insurance policy with long-term care insurance benefits. For example, your loved one could use the cash value to fund premiums on a hybrid policy, which includes life insurance, long-term care benefits, and even living benefits for costs related to strokes, cancer, or illnesses that long-term care insurance may not cover.
“Sometimes, that’s a convenient way for people to fund long-term care insurance because the premium is not coming out of household income,” says Gurley. “You just take the cash value in an old policy and move it to a new policy that offers long-term care benefits.”
This article originally appeared on aplaceformom.com and was syndicated by MediaFeed.org.
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5 Tips for Finding the Perfect Senior Living Place for Dad
Moving to a senior living community is a big step for all aging adults, but it can be particularly difficult for elderly men with care needs. Women tend to dominate the resident population in most senior living communities. This leads many men to believe that senior living communities can’t accommodate their needs and interests. However, communities often incorporate activities and amenities specific to aging men to help them feel at home.
Read on for advice on how to navigate senior living options, tips on how to find a new place for Dad, and activity suggestions for elderly men.
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Older men are often more reluctant than women to move into senior living. In fact, men only make up 30% of assisted living residents.
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Men may be hesitant about senior living for multiple reasons. Fear of losing independence and overall discomfort may prevent them from moving.
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Senior living communities are implementing ways to accommodate men. Men’s clubs, masculine spaces, and specific activities are designed to help men feel comfortable and at home.
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Involve your dad when searching for senior living. Address his fears, be honest, and make sure he’s included in the search for an ideal community.
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Men only make up 30% of assisted living residents in the U.S., according to a National Center for Assisted Living report. Here are a few contributing factors that lead to the significant gender difference in many senior living communities.
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“Men tend to have a fear of losing their independence,” says Suzanne Roberson, a senior activities coordinator at Sunrise Senior Living. “They need to be reminded that they still champion their own lives and that senior living staff is there for assistance and to enhance their quality of life.”
Some signs that your male loved one may be experiencing this fear may include hesitance to receiving assistance with activities of daily living (ADLs), denial about their level of independence, or getting upset when talking about senior care options.
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The average lifespan for a man in the U.S. is 74, while the average for a woman is 79, according to the Centers for Disease Control and Prevention (CDC).[02] However, this age gap has been shrinking for decades. And as the population gets older, senior living communities are aware of the greater need for gender-diverse senior care.
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Women are more likely to care for aging family members — including a spouse. As a matter of fact, over 75% of all caregivers are women, according to the Institute on Aging.
Many men of the baby boomer generation are used to being the provider, so they may not be prepared to manage a household while caring for an aging spouse. On the other hand, older women are often used to caring for children and the house, making them more likely to care for their husbands at home. Divorced senior men are also more likely to marry younger women who can care for them longer.
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As shown through assisted living statistics, eighty percent of senior living staff members are women. That number makes sense, as recent research says most people prefer to have their primary care doctor be the same gender.
So when it comes to the reasons for the gender difference in senior living, it may be that some men feel uncomfortable receiving female nursing assistance with ADLs, such as dressing and bathing.
If that’s the case for your loved one, be sure to ask prospective communities about male caregivers. Some communities may work with you to make sure that only men bathe or dress them. There may also be male-only nursing homes or units in certain areas.
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Gains in lifespan potential come as good news for most men, of course. However, there’s still an increased likelihood that men may outlive their wives, or that men live to be older and have more health complications than they would have in the recent past.
It’s no surprise then, that more men are entering senior care facilities these days. Other factors driving this trend include the following:
- Childlessness. Adult children and grandchildren are the most frequent providers of non-institutional elder care. However, recent trends show that the number of adults without children is increasing. Approximately 16% of seniors ages 65 to 74 are childless, meaning more men and women are turning to senior living as an option.
- Serious health conditions. Whether acute or chronic, health conditions are the driving force that propels many seniors to enter assisted living. Nearly half of assisted living residents have been diagnosed with two to three of the most common chronic conditions, which consist of high blood pressure, arthritis, diabetes, heart disease, and more, according to the CDC.
- Innovations in assisted living arrangements. Today’s senior care facilities offer amenities such as restaurant-like meal service, housekeeping, and transportation to outside activities. Combined with personalized care services and round-the-clock access to emergency help, these offerings make assisted living seem like an obvious choice for many men. Some communities also have purposeful lifestyle programs. Such lifestyle programs aim to engage residents’ minds, bodies, and spirits for a fulfilling lifestyle.
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Whether a man will feel at home in a community is a common concern family members share when seeking senior living for a male relative, says Nick Chareas, a Senior Living Advisor at A Place for Mom.
“Early on in the call, they’ll wonder if Dad will fit in.”
Fortunately, senior living communities have groups, activities, and offerings universally enjoyable for people of any gender. Some activities and amenities — like men’s clubs — cater specifically to men’s traditional interests. Below, learn about men-favored activities and five things to look for when touring senior living and assisted living communities for men.
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“Many communities offer men’s clubs and groups where men talk about sports, current events, watch a football game, or enjoy a beer,” says Roberson.
Seeking out a men’s group can help your male loved one avoid senior isolation and help ensure that they form new friendships and make connections with like-minded people in their new home. There are many types of men’s groups across senior living communities. Group formation is usually based on the mutual interests of the men in residence. Food, sports, and games are common interests, so many of these clubs at our partner communities revolve around such festivities.
Describing a men’s group he encountered while visiting an assisted living community in Chicago, Chareas recalls residents laughing and feasting together on a hearty meal during their weekly Saturday meet-up, where they play card games and enjoy each other’s company.
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It’s sometimes difficult for veterans to adjust to a new environment, so many communities recognize that and offer veteran-specific activities. Gathering with other veterans to share stories and build camaraderie can be very comforting in a new place. It’s common for veterans to gather for coffee and dinner, according to Jane DiSalle, a Senior Living Advisor with A Place for Mom.
“Honor walls are also quite popular, with residents’ wartime veteran’s pictures hanging for all to see,” she says.
These walls help ensure that a veteran’s service is continuously recognized. Many communities also host Veterans Day activities and take residents out to local celebrations. Some communities with a higher veteran population may even provide transportation and help residents participate in local Veterans Day parades and festivities.
In addition to activities, many senior living communities offer support groups for veterans. These groups enable veterans to share personal stories and experiences, and they provide a safe environment, free of judgment, to enable veterans to connect with one another.
Seniors on the more independent side often seek volunteer opportunities to support local veterans. So check with prospective communities to see how Dad can continue volunteering.
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Most communities create gender-neutral common areas with the comfort of every resident in mind. There may also be additional spaces for male-interest clubs, a designated “male space” or “man caves” that some traditional senior men may enjoy.
Here are some examples of masculine spaces:
- Some communities design rooms to look like pubs or fishing lodges. Other communities have designated game room nights, where men can gather to play poker, participate in sports trivia, and more.
- A private room is also a great space to personalize, but be sure to ask about decorating rules. Can your dad move in with his memorabilia? If there’s artwork on the walls, can he change it?
- Many senior living communities have on-site amenities like salons. Ask if the salon offers regular services for men, such as barber visits or beard trims.
- See if the on-site fitness center offers any male-only workout classes. Some older men may be uncomfortable doing activities like yoga in front of women.
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Men aren’t always as likely to seek each other out to make plans together. If there’s a men’s group in the community, see if the activities director or another staff member helps plan events. If your loved one isn’t particularly social, try to make sure they’ll be invited and welcomed to the activities.
According to Roberson, communities often implement engagement programs where staff members work together to invite, encourage, and assist residents in socializing during their first month or so after moving in. The staff typically learns about the residents’ interests and personalities through a detailed, resident- and family-informed profile. This profile helps staff understand each individual resident’s favored activities.
Profiles also help staff members introduce residents to like-minded individuals in the community and to different social groups. For instance, men tend to dine together in the dining room, according to Roberson. So, within a resident’s first day or week, staff members will often introduce a new male resident to other men and help them initiate a conversation.
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Couples in senior living are less common than single older adults, making it the ideal environment for dating. If your male relative is interested in dating, the social events hosted by most assisted living communities are great opportunities.
Most assisted living communities host mixers to help single seniors mingle. Seniors can also naturally build connections by attending community-scheduled parties, games, classes, musical events, and other common on-site activities.
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When searching for assisted living for men, look for communities that cultivate unique and inclusive activities for all residents. While many games — like chess, cards, and golf — can be enjoyed by all genders, activities designed especially for men can create a sense of camaraderie between male residents.
Here are types of activities assisted living communities typically offer for men.
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Many senior men tend to like competitive activities, explains Chareas. Video games like Wii Sports and sports simulators allow men to compete in virtual versions of their favorite pastimes, including golf and tennis. Some senior living communities may even have their own small putting greens or arrange group outings to tee times at local golf courses.
On-site tennis, pickleball, and shuffleboard courts may also be available for active residents. These spaces enable residents to easily gather with one another for some friendly competition. A select few communities may even have fishing ponds or offer outings to nearby lakes, allowing residents to start a fishing competition of their own.
Communities often host friendly competitions and tournaments for residents. Some of the most common include:
- Bingo tournaments
- Trivia nights
- Scrabble competitions
- Shuffleboard tournaments
- Card game tournaments
Senior living communities usually accommodate their current resident population. So if your dad is interested in challenging fellow residents to a new competitive activity, you can talk to an activity director to see if they can put it on the schedule. Activity directors might also allow residents to rent out specific rooms — like the game room, movie theater, or on-site pub — so men can host competitions or watch parties and drink together in private.
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Crafts and continued education are important for both men and women in assisted living. While knitting and needlepoint sessions are open to both men and women, some men may prefer traditional alternatives like building birdhouses or model cars. Some communities may even offer woodshops, so male residents can continue woodworking in a safe, supervised environment.
To paint a picture of how assisted living communities help residents learn and practice their skills, here’s a list of common on-site creative amenities and activities:
- Arts and crafts center and classes
- Woodshop and woodworking classes
- Book clubs and poetry readings
- Bible studies and groups
- Lifelong learning lectures and classes
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Many communities schedule weekly or monthly outings to give seniors an opportunity to explore nearby activities and attractions. Some outings are as simple as a brunch at a local diner, while others may include attending a local festival.
Many assisted living communities also take residents to the following places during scheduled outings:
- Museums and zoos
- Local parks, gardens, and trails
- Plays, musicals, and symphonies
- Libraries
It’s not uncommon for senior living residents to plan group trips, which are often facilitated by the assisted living community’s staff.
Chareas recalls meeting a particularly energetic 96-year-old wheeling his suitcase into the elevator of an assisted living facility. The older man was the leader of his community’s weekly poker night and was on the way to Las Vegas with a group of senior residents.
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Some communities may host meetings of their local service organizations or groups in community rooms, so senior residents can attend meetings easily. Some common groups that may partner with assisted living facilities are the Rotary Club, Elks, or Knights of Columbus.
Groups like those are a great opportunity for older men to reconnect with any clubs they may have once participated in, and they’re a great way for senior men to get to know younger members.
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How you approach the conversation about moving your male family member to assisted living may be the most difficult and important part of the entire process. Older men are often reluctant to accept help, but using the following tips can make it easier and help them come to terms with a move.
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Loss of purpose, physical weakness, and dependence on others are some of men’s top fears about aging. Make sure you acknowledge such fears and help them see how assisted living senior communities can help eliminate some of them. The right senior living community will let them retain independence at a safe level, so they don’t have to feel at a loss.
Fear and worry often cloud judgment, so it’s important that you help your dad see how a senior living community will accommodate his needs and help him lead a healthier, more fulfilling lifestyle. Some benefits of assisted living senior communities include:
- Social opportunities, like parties, group games, and shared spaces
- Safety, like caregiver assistance, monitored entrances, and accessible features
- Health maintenance, like fitness classes, well-balanced meals, and regular wellness checks
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The senior living conversation is always a difficult one and can be especially challenging for men who don’t want to be cared for. When you approach the conversation, be sure it comes from a place of love and care. If it results in a heated argument, step away and try to revisit the conversation after a few days.
Once both parties have decided to move forward with senior living, be sure to involve them in the decision process. Account for their preferences and needs, consider their opinions, and let them have a say in where they’ll receive care.
Here are some tips for including them in the decision:
- Make a list of their care needs together.
- Make a list of their personal preferences.
- Select a few senior living options in the area.
- Tour communities together.
- Weigh the pros and cons together.
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All these factors came together for Janet Hershey, whose father wandered at night and risked having a safety incident. She felt reassured that her father would be seen and appreciated in the community they eventually chose.
“I love the interaction with the staff and the residents,” Hershey says. “Every single staff member knows every single resident’s name. I just knew my dad would really like that.”
Roberson also emphasized the importance of caring staff members. It’s crucial for each staff member at an assisted living community to have a passion for helping seniors lead their best lives. She says you can immediately tell when a community’s staff truly cares for its residents, because you’ll see it in the way they act and talk.
For Hersey, the staff’s willingness to bond was a selling point, but activities sealed the deal.
“Every month they send out an activity calendar to the families,” Hershey explains. “I’d go two or three times a week. Probably every week they have live music. We’d dance with all the residents. They have arts and crafts. They have exercise classes. Then, once a month, we’d go on a bus ride together. We went to the beach and had lunch.”
“I feel like he knows that we love him,” Hershey adds.
This article originally appeared on APlaceforMom.com and was syndicated by MediaFeed.org.
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Featured Image Credit: Jacob Wackerhausen/Istockphoto.
