Be sure to explore these two different types of private insurance that might pay some of the cost of assisted living for your loved one.
Long-term care insurance
If your loved one has a long-term care insurance policy, it might have specific coverage that can be used to help pay for assisted living. It might pay a set daily amount for assisted living if his or her physical or mental condition would otherwise qualify for nursing home benefits under the policy's terms. Or your loved one might have a policy that pays a set daily amount if he or she qualifies for home care -- if so, this amount can be paid directly to your loved one while he or she is in an assisted-living facility, or it can be paid directly to the facility.
To find out, look carefully at the policy itself to see if assisted living is specifically covered. If not, see if there's coverage for in-home care, which your loved one might qualify for and which can then be used to partially offset the cost of assisted living.
Life insurance for cash
If your loved one has a life insurance policy, you may want to look into whether it could provide money now to help pay for assisted living, instead of you or your loved one asking for help from family members later. Cashing in that life insurance might provide a substantial amount of money to help pay for assisted living.
Certain life insurance policies can be cashed in with the insurance company itself for 50 to 75 percent of the policy's face value, though some policies permit these "accelerated benefits," or "living benefits," as they're called, only if the policyholder is terminally ill.
If these accelerated insurance benefits aren't available, you may want to investigate whether a "life settlement" (also called a "senior settlement") may be possible. This involves selling the policy to a life settlement company (different from the insurance company that issued the policy) for a lump sum. The exact amount of the payment -- 50 to 75 percent of the policy's face value -- depends on the policy benefit amounts, the policy's monthly premiums, and your loved one's age and health. After buying the policy, the settlement company keeps paying the premiums until your loved one dies, and then the life insurance benefits are paid to the settlement company rather than to the policy's original beneficiaries.