A Life Insurance Conversion Program is a new type of program and at the time of writing, there was only a single organization offering the program. The program’s name is the Life Care Funding Long Term Care Benefit Plan (ABP).

For example, a policyholder sells their policy for $36,000. They move into an assisted living community that costs $3,000 / month. The policy buyer will pay directly to the assisted living community, the complete cost of care for one year ($3,000 / month x 12 months = $36,000). Should the assisted living resident pass away before the year is complete, there is a preservation of assets clause that will pay out the remainder of the agreed upon amount to a designated individual.

The policy would be of no value to the individual were it allowed to lapse and the cash surrender value might be very low relative to the policy amount. By converting the policy into long term care payments, the policy holder is able to get greater economic value from the policy then the cash surrender value and they receive that benefit while they are alive and require care. The other benefit of the Long Term Care program is that for the duration of the agreement, the family is freed from the administrative tasks of managing the policy and managing payments to their care provider.