Facing the costs of memory care for a loved one with Dementia or Alzheimer’s can be overwhelming. “How to pay for memory care” is a common concern, especially as these expenses can quickly accumulate. One effective and often underutilized method to cover these costs is through life settlement options, selling a life insurance policy. This approach can provide immediate financial relief and help families afford the necessary care.
Current Costs of Memory Care
The cost of memory care varies significantly based on location, facility type, and the level of care required. As of 2024, the national median cost for memory care is approximately $5,430 per month. However, costs can range from $3,000 to over $10,000 per month, depending on the region. For example, the District of Columbia has the highest median cost at $11,490 per month, followed by Vermont at $8,400 and Hawaii at $8,100
Life Settlements: A Viable Funding Option
For those looking to cover the costs of memory care, a life settlement can provide a valuable financial option. In this process, you sell your life insurance policy to a life settlement company that purchases these policies. The buyer pays you a lump sum, which is always more than the cash surrender value, but less than the death benefit. This money can then be used to cover expenses like memory care.
This approach can be particularly helpful for individuals who no longer need their life insurance policy or can no longer afford the premiums. By converting the policy into immediate cash, families can better manage the high costs associated with specialized care. This can be a crucial source of funding for memory care, offering several advantages:
Immediate Access to Funds
Selling your policy provides quick liquidity, crucial for covering immediate memory care costs.
Maximized Value
The payout from a life settlement is generally higher than surrendering the policy back to the insurance company.
Flexibility in Use
The funds obtained can be used for any purpose, including medical expenses, memory care, or other living costs.
Is Selling a Life Insurance Policy Right for You?
Deciding whether to sell your life insurance policy depends on several factors. If you are asking, “Should I sell my life insurance policy?” consider the following:
Age and Health
Policyholders who are 65 or older, or those with significant health impairments, are more likely to qualify. If an insured is in need of memory care, they are likely to be eligible.
Policy Type and Value
Universal, whole, and convertible term life insurance policies are the most commonly sold types. Policies with a face value of $100,000 or more are often required.
Financial Needs
Assess your immediate and long-term financial needs. Selling your policy can provide necessary funds but means forfeiting the death benefit.
Other Funding Options
In addition to life settlements or a viatical settlement, families can explore other funding methods for how to pay for memory care:
Personal Savings and Investments
Using personal savings, retirement accounts, or investments can help cover costs.
Veterans Benefits
Eligible veterans and their spouses may qualify for Veterans Aid and Attendance benefits.
Medicaid
For those who qualify, Medicaid can cover memory care expenses, typically in a shared room.
Long-Term Care Insurance
If you have a policy, it may cover memory care costs, depending on the policy terms.
While these are viable options for many, not everyone has access to them. Many people do have existing life insurance policies that could be used while they are still living to help to pay for vital care.
To find out if you are likely to qualify, please give us a call at 800-727-7654. It usually only takes a 5-minute phone call to find out if you’re eligible to receive a lump sum cash offer for the hidden value in your existing life insurance policy.