Life Settlements:
A Lifeline for Long-Term Care Funding

An existing life insurance policy could offer a potential solution. LTC News has partnered with Retirement Genius to help you explore how this works—and whether it’s the right fit for your situation. It won’t be appropriate for everyone, but for some families, it can provide critical funding when other resources are unavailable.

When a care crisis is looming and options are limited, it's worth taking time to educate yourself. Knowing your choices ahead of time can make all the difference for your family.

A Life Settlement is the legal sale of an existing life insurance policy to a third party — typically a regulated financial institution — for more than its cash surrender value (CSV) but less than its full death benefit. The buyer takes over the policy, pays the premiums, and collects the death benefit in the future.

For seniors facing long-term care costs, this transaction can unlock tens or even hundreds of thousands of dollars to pay for home care, assisted living, or skilled nursing — all without waiting for an insurance claim or Medicaid qualification.

Most life insurance policyholders don’t know they have the legal right to sell their policy. In fact, 88% of policies are eventually lapsed or surrendered — which means the policyholder (or their family) gets little or nothing.

Yet the life settlement market is growing rapidly — over $4.5 billion in annual transactions — offering a smart, regulated alternative.

Common reasons to explore a life settlement:

• You no longer need the coverage
• You can’t afford the premiums
• You need money for care or retirement
• You're applying for Medicaid and want to spend down assets

To be eligible for a life settlement:

• You’re age 65+ (ideal range 75–92)
• You have measurable health impairments
• Your policy has a death benefit of $100,000+
• You own a universal, whole, term, or convertible life policy

Good To Know: The process typically takes 30–90 days. There are no out-of-pocket costs, and if you qualify, your long-term care payments can begin immediately.

Settling a life insurance policy is considered a Medicaid-qualified spend-down if the funds are used for care. You also remove the policy from being counted as an asset, improving eligibility.

Important: Always consult with a legal or financial advisor. Retirement Genius and LTC News do not offer tax or legal advice.

Life Settlements are regulated by state insurance departments with the following safeguards:

• Full written disclosure of all offers and fees
• Comparison to accelerated death benefit and other options
• Competency certification for the seller
• Licensing of all settlement companies
• Consent from beneficiaries (commonly required)

A person with fiduciary duty must act with loyalty, honesty, and care, avoiding conflicts of interest and putting the other party’s interests ahead of their own. Breaching this duty can result in legal consequences, including financial liability.

Don’t let a client lapse a policy that could fund years of care.

A life insurance policy is a financial asset. Before surrendering or letting it lapse, consider whether a Life Settlement could help you or a loved one afford the care you need today — while preserving dignity and independence tomorrow.

Learn about the current and future costs of long-term care services where you live

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