Professionals within the Life Settlement Industry are saying that this new law, recently passed in Texas, could potentially affect the whole life settlement industry. So what is it about this new law that has life settlement professions jumping for joy? The new Texas law allows individuals to obtain Medicaid with a life insurance policy, with the requirement being that they sell the policy through a life settlement firm, and use the earnings for their own personal long-term health care needs.
Prior to this new law, Texas residents were not eligible for Medicaid if they still had an existing life insurance policy in force. This is largely because Medicaid, as a need-based form of health insurance, required members to surrender all of their financial assets, including life insurance policies, before they were deemed eligible for the program.
As if this legislative change in Texas wasn’t shocking enough, a number of other states are following their lead by drafting similar bills to be brought before their legislatures for review. These states currently include New Jersey, California, and New York. Many people predict that the majority of states will eventually have a law similar to that of the new Texas law, within just a few short years.
Although life settlement firms and prospective Medicaid users are excited about the new change, life insurance professions aren’t nearly as thrilled. A law such as this one means nothing more than a decrease in revenue for life insurance companies in Texas, and eventually life insurance companies all across the world. The decrease is due to the fact that insurers will be much more prompted to sell their life insurance policies as opposed to letting them lapse like some people tend to do. Ultimately this means that life insurance companies will have to pay out death benefits to a much larger customer basis than they initially predicted.
Even though the new Texas law isn’t favorable in everyone’s eyes, it does add a much needed boost to the economy. Because the average age of death is increasing each year, Medicaid, and other government-funded programs are having to dish out more money than ever to provide healthcare assistance for seniors. This new Texas law makes it so users of the program have to use their own money, obtained through life settlements, to help with long-term healthcare costs in addition to getting assistance.
Not only is this new law a victory for life settlement firms and investors, but there are also several perks for Medicaid users who sell their life insurance policies. Perhaps the main benefit is that they will not be restricted to a specific long-term care service like other Medicaid users are; they will be able to choose their own services and locations. In addition, Medicaid users who go through the life settlement process will still be allotted the same benefits as other members of the program (outside the terms of the long-term care), such as preventative care, emergency services, prescriptions, mental health services, doctor visits, etc.
There is no doubt that the life settlement industry is on the rise as it provides various perks for both insurers and investors. If you are a senior 65 years of age or older, and are interested in learning more about the life settlement process, give us a call today at 877-303-9777.