ASK THE PROS

Is the Life Insurance Policy Safe?

Justin, I’m helping my dad file for Medicaid to help with his nursing home.  He has a life insurance policy meant to cover his funeral.  Our caseworker at DHS is asking a ton of questions about it.  They can’t take it away from him, can they?  – Regina

Regina, The short answer is no, DHS cannot take your father’s life insurance policy from him.  But it’s more complicated than that.  He could be denied Medicaid because of that policy.

The first thing you should know is that the death benefit on a life insurance policy is safe.  It doesn’t matter whether the policy is meant to cover a person’s funeral or simply pay to his kids; the death benefit cannot be claimed by DHS.

The second thing you should know is that most burial policies are safe.  DHS allows applicants to own certain assets, and burial policies are near the top of the list.  However, the policy you described probably wouldn’t qualify as a burial policy by their definition.  Just saying that an insurance policy is meant to cover someone’s funeral is not enough to officially make it a burial policy under Medicaid rules.

So if burial policies are safe and the death benefit on any type of policy is safe, what’s the problem?  Why is DHS asking questions about the policy?  The primary concern is any current cash value the policy might have.  Many life insurance policies build cash value that is immediately available to the owner.  DHS counts that cash value as an asset just like they count money in the bank.  That’s probably the reason you’re getting all those questions.

The Medicaid application process can be very stressful, and there are a ton of pitfalls you can hit along the way.  If you want to read more about that process, check out my website; order my book while you’re there.  But if you’re already there—if a Medicaid application is on your immediate horizon—don’t wait.  Call today and let us help you do it right the first time.

Are you in a similar situation?

We can help you navigate your unique circumstance.

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