New Bill HR 7203 Would Allow Life Settlements to Fund Long-Term Care
A new bill being weighed by the U.S. House of Representatives would make provision for the tax-free rollover of life settlement proceeds into tax-free accounts dedicated to long-term care. The bill, H.R. 7203, was sponsored by Rep. Kenny Marchand (R-TX) and referred to the House Ways and Means Committee on November 30.
H.R. 7203, known as the Long-Term Care Account Act, would provide a significant benefit for seniors who are facing the daunting costs of long-term care. If those individuals have a life insurance policy that is no longer serving them, the bill would permit them to easily use the money from a life settlement to fund an assisted care facility, in-home care or other treatments deemed medically necessary.
The provisions of the Long-Term Care Account Act include
Tax-free transfer of funds
The tax-free transfer of funds from a life settlement into accounts used exclusively for long-term care expenses. That money can be used for long-term care insurance or any “qualified health expenses” that a medical practitioner would recommend to treat health impairments or maintain health for retirees.
– As long as the distributions from life settlements into the long-term care accounts are used for their stated purpose, they will be exempt from any tax. If funds are used for unauthorized purposes unrelated to long-term care, those expenditures will be subject to both income tax and a 20 percent excise tax.
– If the funds distributed to the accounts from life settlements are not spent on long-term care expenses, they can remain in the account untaxed until the death of the account holder and that person’s spouse.
H.R. 7203 is a win-win for seniors
The Long-Term Care Account Act is a win for seniors looking for new revenue sources, pairing the prime opportunity of a life settlement with the pronounced need of long-term care. Rising health care costs during retirement are one of the chief reasons people over 65 investigate life settlements, and the passage of this legislation would link the two in a way that will provide tangible benefits to Americans seeking to make the most of their retirement years.
Please don’t hesitate to urge your elected representatives to support this important bill. For more information about life settlements or the pending legislations, you can contact a Magna representative by scheduling a call today.
Designing Spaces on Lifetime Television featured Magna Life Settlements in November! During the episode, an older couple explored the process of a life settlement, the advantages of pursuing a sale of a life insurance policy and the various ways the cash from a settlement can meet the family’s needs during their retirement years. Clay Gibson, Magna’s senior vice president for origination, shared how families can benefit from life settlements.
The Joels, who were featured on the episode, are a retired couple looking to make their golden years golden. Mr. Joel started buying life insurance shortly after the couple got married, but the premiums became too expensive and he was considering either selling or surrendering the policy.
When their daughter Donna Eichner comes over to discuss the possibility, the Joels explain the possible benefits of selling a life insurance policy. Taking a life settlement would allow them to have additional funds for their retirement years. Mrs. Joel speculates on the ways they could use the extra money generated by a life settlement, including travel plans an donating to charity.
Clay Gibson explained, “Life insurance is actually property, and it’s property that can be sold. Half a million insureds are lapsing their policy every year, and that’s half a million insureds that could have come to Magna Life Settlements and received an offer above and beyond what the insurance carrier would have paid them for their policy.”
Mr. Joel enters his information into Magna’s life settlement calculator, and after viewing the results the Joels and their daughter conclude that a settlement is the wisest choice for their family. Their daughter, Donna, said, “I know myself and siblings are well taken care of, and now my parents can do what they want to do.” For the Joels, a life settlement will take an insurance policy that had become burdensome and convert it into a financial asset.
For families who, like the Joels, are seeking to make the most of their financial situation in their senior years, Magna life settlement specialists stand ready to offer information on the benefits of life settlements. Call today to consult with a Magna specialist, or visit the FAQ section of our website for more information on the particulars and process of settlements.
How to Help Your Parent Decide Whether They Should Sell Their Life Insurance
The senior years are full of financial decisions with considerable implications for both the older generation and their children, and the plague of scams against seniors lead their advocates to proceed with extra caution. But for many people over the age of 65, selling a life insurance policy is a wise move with the potential to help meet other needs.
The life settlement industry has undergone significant change in recent years, and if your parents have an insurance policy that is no longer serving them well it might be the optimal time to look for a seller. But what considerations go into such a decision? How do you know if it’s the best choice for the seniors in your family?
When to sell your life insurance policy?
First, children seeking the best option for their parent’s life insurance should educate themselves on the potential reasons for selling. If your mother or father is having trouble paying the premiums, if they need extra income for medical or long-term care, if they are over insured or the situation of their beneficiaries has changed so they no longer need the policy, they might be better off arranging a sale.
Your research should also include questions about the tax implications of either holding onto a policy or selling it. For example, recent changes in the estate tax have created added value for whole and universal life insurance policies, which are usually the types of policies best suited for a settlement. A trusted CPA or financial advisor can be a valuable voice in helping determine the best option for your parent’s individual situation.
Once you determine that your parents will benefit from a life settlement, an easy next step is the Magna Life Settlement calculator, which projects the approximate payout for your life insurance policy.
Because the sale of a life insurance policy affects family members beyond the policy holder, the consideration of a life settlement should be approached carefully, with plenty of input from everyone involved. After you have gathered all of the pertinent information and are ready to begin the life settlement process, you may begin by filling out an online application. If you have any questions, please contact us! Magna has case administrators trained to answer all of your questions and clarify the steps and timetables of your life settlement.
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