There is a market to sell life insurance through what is known as a life settlement. However, there’s no such market for long-term care policies.
A life settlement is the sale of a life insurance policy to a third party. Usually the owner of the policy receives an amount that’s valued at more than the policy’s cash surrender value, but less than its face value or death benefit.
nj.com’s recent article asks, “Can I sell my long-term care insurance policy?” The article explains that HMOs typically don’t include the costs of long-term care or skilled nursing care.
However, some people purchase life insurance policies that contain long-term care riders. This type of policy lets the owner tap into the death benefit for long-term care needs. The policy owner may be able to sell this insurance through a life settlement.
When contemplating the sale of your life insurance policy, you should be certain that you don’t need the life insurance for legacy, estate planning needs or income needs.
Remember that HMOs don’t cover any potential needs for skilled nursing care. A person who moves along the continuum of care to an assisted living facility will need the long-term care insurance.
Be sure to look over the policy details. Long-term care insurance policies, once they’re employed, usually no longer require you to pay the premium.
According to the Genworth Cost of Care annual report, the costs for assisted living facilities in New Jersey, for example, can average over $6,000 a month, while nursing homes average $10,600 per month. This is a significant ongoing expense.
Only a long-term care insurance policy is going to cover the skilled assistance a person will need when she’s not able to do daily living activities, like bathing, toileting, transferring, eating, continence and getting dressed.
Medicare will only pay for up to 100 days in a skilled facility after a hospital stay.
Reference: nj.com (May 21, 2019) “Can I sell my long-term care insurance policy?”