CARE HOMES AND COVID

The number of victims that are coming from care homes all over the world has caused me to think about where the money might be coming from.

Started looking at the insurance angle. Here's some preliminary info I thought I'd share;

Long Term Care insurance (LTC)

Despite the obvious need for final years care, in the last five years we have seen the U.S. long-term care insurance market collapse.

Companies such as John Hancock have pulled out as they struggle with a legacy of past pricing, and Genworth sold itself to a Chinese buyer to re-capitalize following $2.5 billion of legacy LTC losses. (hmmmm China buyer)

What undid the U.S. market has been the product structures, which did not allow companies to respond to the risks chronic older-age conditions such as dementia presented as sufferers started to survive well beyond original expectations. (Covid to the rescue, no more payouts)

https://www.rgare.com/knowledge-center/media/articles/long-term-care-are-we-fishing-in-the-wrong-waters

Life Insurance with an "accelerated death benefit". This is how it works;

Say your policy is worth $500,000. You file a claim with your insurance company to accelerate half of your death benefit $250,000.

The face value of your policy will now be $250,000 because it is cut in half. Your premium payments will likely be lowered since premiums on a $500,000 policy are more expensive than premiums on a $250,000 policy.

The insurance company has to make up for some of that loss, so they’ll take out some fees. So instead of $250,000, your check is for 70% ADB amount, leaving you with $175,000.

In this scenario, you are left with $175,000 in cash plus a life insurance policy with a $250,000 death benefit. The insurance company walks away with $75,000 in fees. (nice "fee").

Viatical Settlements

A viatical settlement is when someone who is terminally or chronically ill sells their life insurance policy to a third party. The policy seller receives a lump sum cash payout that is more than the cash surrender value, but less than the death benefit. The buyer receives the policy’s death benefit when the seller passes.

The History Of Viatical Settlements

The word “viatical” comes from the Latin word “viaticum,” which refers to provisions or money for a journey. (money for a journey or how to identify the journey takers?)

The precedent for viatical settlements stems from the 1911 Supreme Court ruling in the case Grigsby v. Russell, which established the legal basis for selling life insurance in a secondary market. (just in time for all those maimed WW1 casualties to come home in need of expensive care)

More than 70 years after the ruling, the modern life settlement industry began to take form. The establishment of the first viatical settlement company became necessary with the emergence of the AIDS epidemic. (we all know how this came from monkeys)

https://www.masonfinance.com/viatical-settlement