(July 8, 2008) Life Care Funding Group (LCFG) released a White Paper this week examining the growth of Life Settlements as an alternative funding vehicle for seniors moving into senior housing and skilled care environments. A Life Settlement is the sale of a life insurance policy by the policy holder while still alive; to an institutional investor that will pay a lot more for the policy than the cash “surrender” value. The institutional investor will then carry the policy as an investment for the remaining life span of the policy owner.
For example, the cash “surrender” value paid to a policy owner by an insurance company may range in value 2%-5% of the face amount, or death benefit, whereas a Life Settlement could yield 20%-60% of a policy’s value. All forms of life insurance are eligible, and the typical minimum age of a policy owner is 65.
A Life Settlement is an alternative funding option that will allow anyone considering senior housing and/or care to not have to use their home, savings or family member’s financial support as their first choice to raise money. LCFG’s clients are able to offer Life Settlements as a “funding bridge” so that people can move forward securing the best and most appropriate circumstances to meet their needs without worrying about liquidating dearly held and/or underperforming assets. Based on the size of a life insurance policy and the amount derived through a Life Settlement, it is also possible that they could live indefinitely on those funds without needing to encumber or liquidate other components of their estate.
“We have found Life Settlements to be an excellent marketing tool and funding alternative to present to everyone we talk with about entering one of our properties,” explained LCFG client Glen Cyr, Senior Vice President and Chief Financial Officer for North Country Associates, a privately owned company that owns and manages 23 skilled and assisted living facilities in Maine and Massachusetts. “We believe that if we can provide people with as many financial options and tools as possible, then we have done our company and our clients a great service.”
The three admissions circumstances that the White Paper explores are:
- Pure private pay in independent, assisted and skilled living environments
- Short term stays funded by Medicare that ceases coverage after 100 days
- Policy owners applying for Medicaid coverage and must liquidate a policy to qualify
In each scenario, a Life Settlement can raise money for the owner of a life insurance policy in as little as 30 days.
To obtain a copy of the White Paper, Life Settlements: Looking for a Calm Financial Harbor in a “Perfect Storm” please visit www.lifecarefunding.com/info