What happens to any balance on a term life ins. policy after final expenses are paid?

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What happens to any balance on a term life ins. policy after final expenses are paid?

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My husband is on Medicaid and in a nursing home. He has PD as his greatest challenge and the majority of his monthly bill is paid by Medicaid. We both thought any balance of his TERM life ins. policy - which is substantial - would go to me, but someone told me that even though it has no cash value that Medicaid would take any balance as a kind of "payback." Is that correct or would it only pertain if it were a whole life policy?

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According to this link, term life insurance is no considered an asset. You are correct that if it were a whole life policy, it WOULD be considered an asset. That's my interpretation of what I'm reading on the internet here: elderlawanswers/can-life-insurance-affect-your-medicaid-eligibility-12421

It sounds as though you should speak with an elder law attorney just to make sure.

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term life insurance is in fact a asset.That policy must be sold. That policy should have been reported to Medicaid prior of applying for Medicaid. Shame on you for not reporting it to Medicaid when the time of applying. All insurance policies must be reported when applying for Medicaid. Medicaid will require you to sell or cash in that policy. Medicaid will seek those funds.That is asset and is income. Contact Medicaid and report this. If you think your gonna take the policy and go hog wild think again.There is website/companies that buy policies as well. "payback." it is.Value or not.Call a attorney or Medicaid.

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According to all the insurance sites I Googled, term life insurance is not considered an asset as it has no cash value. It cannot be sold. It passes to the beneficiary with the death of the holder.

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So, dogabone. Please don't judge. I did report this to Medicaid and I thought I understood that it was not an asset. Good advise to check with an Elder Attorney. I did not think of that. Doing it today.

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Term life insurance policies are not part of the Medicaid qualifier nor the Medicaid Estate Recovery program because it is not considered an asset. Dogabone you are confusong whole life insurance with term life insurance. Whole life insurance has a cash value which is an asset. Term life insurance has no cash value to the holder of the policy.

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I agree with Debralee. Not an asset.

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Dogabone, I see you have returned to start posting again. Darn. Anyhow, as usual you don't have any basis for your inaccurate comments. Term life insurance is not a countable asset for Medicaid, in other words it is exempt, just like others assets are not counted (a certain amount of liquid assets, vehicle, etc). Please refrain from trying to shame people who do things right, instead of trying to hid the cash in the freezer. You know what I'm referring to, as your previous suggestions that everyone try to defraud the government.

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Term life doesn't have a surrender value, so isn't considered an asset. How would one start to cash it in? Can't be done. What happens to the money is up to the beneficiary. If the insured wants the money to cover final expenses, it would be good to honor that. Any left over is left to the discretion of the beneficiary.

A person receiving Medicaid can't continue to pay for the insurance policy, but others can keep up the payments for the insured unless it is forbidden by the contract with the insurance companies. I've never heard of this being the case.

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BTW, I don't think that Medicaid recovery would go after term life money, mainly because that money belongs to someone who was not the one on Medicaid. The state has no interest in impoverishing the spouse. I could be wrong here. Maybe one of our members well versed in Medicaid recovery will be along soon.

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Thank you all for the great comments on Medicaid recovery. I did check with an elder attny. who actually could not give me an answer. He did have a suggestion though: may be better not to sign over any ins. policy to a funeral home (who would make the claim then the ins. company would pay the funeral home and mail balance to beneficiary.) Medicaid may consider that left over as part of probate estate. Better to keep it neat and clean and simple. Beneficiary would make the claim, receive the money, pay for the funeral then use the balance at his discretion. Whew. This stuff is stressful and confusing!

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The elder law attorney should have known the answer to that, but his advice is correct anyhow. Find another attorney if anything more complicated comes up.

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that is my thought as well.

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What happens to any balance on a term life ins. policy after final expenses are paid?

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