Depending on your age, health and the policy features it may be possible to sell your existing life insurance policy for significantly more than the cash value and use the proceeds to fund your long term care needs. (It is even possible to sell some term life insurance policies that have no cash value.)

Case Study:

George's arthritis has been getting progressively worse. He purchased a Nursing Home policy years ago, but like most people, prefers to stay at home as long as possible. Now a widower, George's children moved away years ago. So George contracted with a home care agency to come in every morning for a few hours. It's worked well, but George was worried that he couldn't continue to afford it. One possibility he considered was dropping his term life policy now that his wife was gone, to save money on the premiums. He also called his Long Term Care agent to discuss his options under his LTC policy. His agent suggested using a Life Settlement to fund his home care. George was able to receive $68,000 cash for his term life policy ($400k face value) which he would have lost if he'd simply let the policy lapse. After paying taxes, he still has sufficient funds left to continue to pay for private care at home, helping him avoid a premature nursing home stay.According to Kiplinger's Retirement Planning Guide:

"The idea of reselling life-insurance policies is gaining in popularity, particularly among older policyholders who no longer need the insurance or can't pay the premiums. Some people use the money to buy cheaper life insurance or long-term-care insurance or to add to their retirement nest egg." 1

Life Settlements give policy owners a more desirable alternative to surrendering or terminating a life insurance policy. The policy is typically sold through a broker on the secondary market to an institutional funding source that assumes ownership and premium payments. When the insured dies, the institution receives the proceeds from the death benefit. Life Settlement offers vary but average about 3.5 times the cash surrender value, or 20% of the policy face value. Even policies with no cash value, such as term policies, may have market value.

Proceeds for Life Settlements can be used in any way you choose.

1 Kiplinger's Retirement Planning Guide, Fall 2005 p92