If you or a loved one has had to enter a hospital in the last several years, you’re undoubtedly familiar with this scene that was recently highlighted by the AARP.
The patient is lying in a hospital bed, either awaiting or recovering from a procedure. Suddenly, a staff person who isn’t a doctor or nurse enters the room and introduces themselves as a member of the billing team. They talk to the patient and any family members present about what the bill is expected to cost, and ask how they would like to pay it.
This can be a shock to the patient – after all, they’re going through a fairly stressful experience, and a hospital bed isn’t exactly the place you’d expect to be discussing financial plans.
Unfortunately, this can lead to patients and their family members making emotional decisions that they haven’t fully thought through. When placed on the spot that way, many patients end up agreeing to financing plans that are not in their best interest.
While life settlements are often thought of as a way to help pay for long-term care, seniors and financial advisors may not always think of them as a method of paying for hospital care. Here’s why – and when – life settlements can be a good solution for paying medical bills.
Life settlements allow you to liquidate an asset you already have.
Unlike a loan or payment plan, life settlements are a way to access funds from an asset you already own: your life insurance policy.
For people carrying policies that they no longer need, or that are costing them too much in premiums, life settlements can be a great option. Rather than surrendering the policy for a fraction of what they’ve paid into it, a policy owner can work with his or her financial advisor to sell the policy to investors for much more than the surrender value.
After the sale, the seller receives a lump sum that can be used however they like – including paying high medical bills.
Life settlements can provide a source of funding for people who haven’t saved for healthcare costs.
Many seniors – even those who have saved adequately for retirement – haven’t saved enough to cover potential medical or long-term care costs.
With these costs rising steadily, it’s becoming more important than ever to have some method of covering unexpected healthcare expenses, other than dipping into your retirement accounts.
For seniors who have terminal illnesses, chronic medical problems, or simply are experiencing the medical issues that can come with aging, a life settlement can provide a financial safety net.
If your life insurance policy is something you no longer need or want to carry, it may serve you better by being sold as a life settlement. For more on this topic, read our post “Using a Life Settlement to Pay for Healthcare Costs.”