When a loved one is considering moving into an assisted living community, the financial budget will often play a significant role in the final decision. The good news is there are many possible funding sources – with several that may be overlooked.

Families are often surprised to learn that various insurance options can contribute to senior living expenses. The following information explores the possibilities that extend far beyond the typical long-term care policies.

Discuss with your parent which opportunities may be available to provide not only another financial resource but also the relief that funding the cost of assisted living can bring.

Using insurance for senior living: the options

When creating a budget for senior living, you’ll want to gather all financial information, including insurance policies. Consider whether the following may be able to help:

1. Long-term care insurance

Long-term care insurance is specifically designed to cover the costs of long-term care services, including assisted living. It’s a valuable resource that can significantly reduce out-of-pocket expenses. However, it’s essential to understand the terms, limitations and exclusions, as coverage can vary widely. Policies typically must be purchased at a younger age and before a need arises.

2. Life insurance policy conversion

Life insurance policies can be an unexpected source of funds for many families. Some options may allow converting a policy into a funding source to pay for assisted living, including the following:

Life settlements: A life settlement involves selling the life insurance policy to a third party for a lump sum, typically more than the cash surrender value but less than the benefit that heirs would receive at death. This option can provide immediate funds to cover assisted living expenses.

Accelerated death benefits: Some life insurance policies offer accelerated death benefits, allowing policyholders to receive a portion of the benefit while still alive. This can help cover the costs of assisted living, especially in terminal or chronic illness cases.

Viatical settlements: Similar to life settlements, viatical settlements involve selling a life insurance policy, typically when the policyholder is terminally ill. The buyer pays a portion of the policy’s face value, takes over premium payments and will receive the full benefit upon the policyholder’s death.

Download our complimentary

Family Guide to Funding Senior Care & Housing

3. Health insurance, Medicare and Medicaid

While standard health insurance and Medicare generally don’t pay for long-term assisted living costs, they can still contribute by covering medical expenses, hospital stays and some short-term rehabilitative care. It’s crucial to review individual policies to determine what medical-related costs are covered as this might be a contributing source and free up other resources to pay for assisted living.

For those with limited income and assets, Medicaid can be a resource to pay for long-term or skilled nursing care, but eligibility and coverage vary by state. It’s a good idea to consult with a Medicaid planner or elder law attorney to explore eligibility and understand the specific benefits available where your loved one lives.

4. Annuities

An annuity can be another funding source for senior living. Annuities are typically bought through an insurance company. Options can include a lump sum payment or a guaranteed income stream for a specified period or for life. This consistent income can be directed towards the costs associated with assisted living.

5. Combination (hybrid) policies

Some insurance companies offer policies that combine life insurance or annuities with long-term care coverage. These hybrid policies can provide flexibility, allowing for long-term care coverage if needed or a death benefit for heirs if the care was not utilized.

Insurance for senior living: where to reach out for help

Insurance options and government benefits can be complex and difficult to understand. Consulting with a financial advisor or elder law attorney specializing in long-term care planning is invaluable. They can provide personalized advice, help identify the most suitable options and assist with application processes – ensuring that all available resources are utilized effectively.

Members of the administration team at the senior living community you are interested in can also provide a wealth of information, including different financial options you might wish to consider. Professional advice can significantly simplify the path.

Each family’s situation is unique so a personalized approach is essential. While tapping into insurance benefits for senior living can be part of the solution, the key is to plan early, stay informed and seek professional advice to navigate the financial landscape efficiently.

The Charleston Senior Living Community

Locally owned and operated, we offer personalized care by our dedicated team members. Setting a new standard in Assisted Living and Memory Care, we don’t define our residents by their limitations or illness but instead believe in focusing on the positive and the possibility.

The Charleston Senior Community includes private apartments for assisted living residents and for those living with Alzheimer’s or dementia. Your loved ones will benefit from our attention to detail, routine health assessments, delicious dining and daily activity programs as we support everyone to live their best life.

Consider a few of our amenities:

  • Chef-led dining program
  • Community movie theater
  • Salon
  • Ballroom
  • Live entertainment
  • Outdoor patio
  • Social lounges
  • Housekeeping

If you or your family is thinking about Assisted living or Memory care, we hope you will consider The Charleston Senior Community. We are a trusted resource and are here to answer any questions, contact us today.

We also invite you to download our complimentary Family Guide to Funding Senior Care & Housing to learn more about making the move to senior living.