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Funding Long Term Care for Your Parents

Edited March 2021

Financial milestones don’t stop at having children, getting married, or retiring. For many, planning for long-term care for your parents is a financial consideration. 

According to a study conducted by Genworth, the national average cost of an assisted living facility in 2019 is 48,612. Up from just $28,800 in 2004. Private room nursing home costs have reached an outstanding $102,200 compared to only $65,185 in 2004. The national hourly rate for a home health aide is $23/hour — more than many working professionals make per hour.

Home care costs are on the rise with no sign of slowing down due to a number of factors including:

  • a higher volume of sick patients
  • a shortage of home health aides
  • a higher turnover of caregivers in the home health industry
  • regulatory changes
  • compensation pressures

Despite assistance from national programs like Medicaid and Veteran assistance, medical expenses for funding long-term care can still be too big a challenge to face alone. So what are your options?

Selling your life insurance policy

Your parent(s) have earned and built equity in their life insurance policy. That policy is their personal property, not the insurance company’s, and you and your loved one should decide how the policy can best benefit you and your family. Deciding to sell it for fair market value is a legitimate and viable choice to create more options for your future – especially when facing funding long term care expenses.

The three avenues:

Retained Benefit: The Retained Benefit option means you would no longer pay any premiums and retain a portion of your benefit. Beneficiaries will receive a guaranteed percentage when the policy ends, but you have no further obligations or payments to make.

Traditional: The Traditional option is to sell your full life insurance policy for a cash amount above the policy’s surrender value. You have no further obligations or claims to the policy, with all future premiums paid by the buyer.

Hybrid: The Hybrid option is a combination of two, where you would sell a portion of your life insurance policy. With this option, you receive a cash payment now, your beneficiary receives a guaranteed percentage of the benefit when the policy ends, and you have no further obligation to pay future premiums.

Companies like Abacus Life are here to give you a fair policy valuation including transparency of the numbers and the numbers behind the numbers.

Use Personal Savings

Saving enough money to pay for loved-ones long term care is a long-haul option. It’s difficult to know the exact expenses that will surface in the future, but planning ahead and setting aside a portion of your investment plan for funding long term care for parents can prove to be a saving grace once it’s needed.

Reverse Mortgages

A reverse mortgage home loan gives a homeowner the option to transfer part of the home value to cash without requiring repayment. The caveat is: if you have existing mortgages or home-related debt you are required to use the funds for those expenses first.

Choosing the right path for funding long term care for a parent can be a challenging thought, but options are out there for you to explore. At Abacus Life, we’re here to help you discover your life insurance options.

Abacus Life Settlements functions as a leader in the secondary market for life insurance. Our primary mission: work to help you understand your financial options. If you decide selling all or a portion of your policy is right for you, we can offer to purchase it from you at fair market value. We will provide all the numbers and details to show you how we determined its value and our offer, and if you decide to accept our offer we will provide you a lump sum amount and then take on all future obligations for the policy, including premium payments.

According to the 2021 Cost of Care Survey, 

The world’s population is aging at a faster rate than ever before and people are living longer. Every day until 2030, 10,000 Baby Boomers will turn 65a and 7 out of 10 people will require long term care in their lifetime.


Author Abacus

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