Life Settlements for Long-Term Care Costs: A Strategy Advisors Should Know

Long-term care is one of the most expensive challenges your clients will face. The national median cost of a private nursing home room now exceeds $100,000 per year. Assisted living and memory care can be just as costly, and most clients arrive at that stage significantly underprepared.

When the need becomes urgent, advisors typically look at investments, home equity, or Medicaid planning. What often goes unexamined is the life insurance policy already sitting in the client’s portfolio — one they may be considering lapsing.

A life settlement for long-term care costs changes that conversation.

A Gap Most Financial Plans Don’t Address

Nearly 70 percent of adults turning 65 will require some form of long-term care in their lifetime. The average duration is close to three years. For clients with cognitive conditions, that timeline stretches further.

Most clients have no dedicated funding strategy. They declined long-term care insurance years ago, assumed Medicare would cover more than it does, or simply never got around to it. By the time care is needed, options feel limited.

That’s where a life settlement can open a door most advisors haven’t considered.

What a Life Settlement for Long-Term Care Looks Like

A life settlement is the sale of an existing life insurance policy to a third-party institutional buyer for a lump-sum cash payment. The buyer takes over future premiums and receives the death benefit. The client receives cash — typically well above the policy’s cash surrender value — to use however they need.

Policies that are generally eligible include:

• Universal life, whole life, and convertible term policies
• Insureds typically age 65 or older, often with a change in health since the policy was issued
• Face values generally starting at $100,000 or more

Unlike an accelerated death benefit or long-term care rider, the proceeds are unrestricted. The client decides how the money is used.

A Real Example

Consider a 74-year-old client with a $500,000 universal life policy. Her health has declined following a cardiac event, and her family is beginning to plan for memory care. The policy’s cash surrender value is $42,000. Her advisor requests a complimentary review through Evergreen Settlements.

After presenting the policy to multiple institutional buyers, Evergreen returns an offer of $118,000, nearly three times the surrender value.

The client funds her first two years of assisted living while preserving the investments her family was counting on. Her advisor identified an asset no one else had looked at. That’s what this strategy looks like when it’s introduced at the right moment.

Why This Conversation Is Happening More Often

The life settlement market has matured significantly. It is regulated in the majority of U.S. states, with licensing requirements and consumer disclosure standards in place. Reputable brokers present policies to multiple licensed buyers to ensure competitive offers.

What’s changed is advisor awareness. More financial professionals are recognizing that a policy a client planned to lapse, or one whose premiums had become a burden, may have real secondary market value. For clients who are asset-constrained and facing mounting care costs, that discovery can be significant.

What to Consider Before Recommending One

A life settlement isn’t right for every client or every policy. Key factors include the client’s continued need for the death benefit, the tax treatment of proceeds, and how a settlement fits the broader financial plan.

That’s why the first step is always a review, not a transaction.

Evergreen Settlements works as a resource for advisors. We provide a clear, no-obligation policy assessment so you have the information you need before any decision is made. If a settlement makes sense, we manage the process transparently. If it doesn’t, we’ll say so.

The Moment That Matters

The best time to evaluate a life settlement for long-term care costs is before your client lapses the policy. Once it’s gone, so is its value.

When a client’s health has changed, premiums have become difficult to sustain, or long-term care is becoming a real concern, that’s the moment to ask what the policy might be worth on the secondary market. Most clients have never been told this market exists. The same logic that turns a policy into care funding can also surface in life settlement estate planning conversations, or when reviewing whether life insurance is a hidden asset already sitting in the portfolio.