April 1, 2019
Seniors’ Long Term Care Costs Growing as Medical Costs Slow Down
In the study, “Explaining the Slowdown in Medical Spending Growth Among the Elderly,” published in the February edition of the journal Health Affairs, Harvard health economist David Cutler and his research team note that Medicare spending from 1992-2004 grew by 3.8% per year, while Medicare spending only grew 1.1% from 2005-2012. A truly remarkable trend!
The economists attribute much of this trend to the efficacy of more readily available medicinal therapies (i.e.: drugs to treat heart disease) in greatly reducing the risk of acute health emergencies. Thankfully fewer individuals are being admitted to hospitals due to strokes and heart disease- which declined 41% and 56% since 1999, respectively- and therefore there are fewer heart surgeries and post-acute recoveries.
But as seniors live longer they are more likely to need long term care services, and need those services longer. The bad news is that the cost of long term care is steadily increasing year-over-year. Genworth’s “Cost of Care Survey” found that in 2018 a nursing home cost $8,365 per month, or $100,375 per year, an increase of over 56% from 2004. In fact, 70% of people 65 and older will need some form of long term care in their lifetime.
Unfortunately, most seniors in need of long term care don’t know that they may be able to tap the hidden value of their life insurance policy to cover these costs. When 80% of life insurance policies are lapsed or surrendered for little to no value, it is clear that an increased awareness of life settlements is paramount to help allay these steadily growing long term care costs.
A life settlement is the sale of a life insurance policy to a third party for more than the surrender value, but less than the death benefit. So instead of giving the policy back to the insurance company (which they would love) you can ask an investor what your policy is worth to them. That is very much over-simplified, it is highly recommended to discuss your case with a life settlement broker or provider who is licensed in your state. They have the experience and expertise to guide you to the highest valuation for your policy.
Q Life Settlements is here to answer your questions regarding life settlements in general, or to discuss the specifics of your unique case. Is a broker better for your policy, or a provider, what is a realistic valuation? Give us a call or fill out the form below and one of our life settlement experts will gladly help!