Lefe Insurance & Medicaid (institionalized)

[trust_id_09]

What is the name of your state (only U.S. law)? NY

My cousin's mom purchased one of the AARP 10K guarantied life insurance to help w/ Funeral expenses when that day comes. The mom is not much of a saver and is totally unprepared and the burden would fall sollely on him.

But the premium is being paid by my cousin all legit the mom agreed and signed the application.

The question is, what repercution(s) if any, will that small policy have on her elligibility for medicaid (especially institionalized)?

Any input wil be greatly appreciated.

[anteater]

Who owns the policy?

Is it term or whole life? In other words, does/will it have cash value?

[trust_id_09]

Originally Posted by anteater

Who owns the policy?

Is it term or whole life? In other words, does/will it have cash value?

The mom owns it but my cousin pays the premium w/ mom's consent signature. Not sure. The add says there is a minimun of two years and a AARP membership before full amount (10k) can be paid should mom pass.She 78 and it has been at least three years. Don't know if that qualifies as term or not.

Thanks for replying.

[anteater]

Without getting into a long explanation, term life insurance is pure insurance that stays in effect for a set number of years as long as the premiums are paid. When the term ends, the insurance ends. Whole life is intended to be permanent and incorporates a savings component. There is a cash value accumulated with a whole life policy that can be accessed by taking a loan against or surrendering the policy.

Medicaid considers the cash value in an insurance policy to be an asset and it would be included in the Medicaid asset maximum - $2,000 now, I believe.

You would need to check with the state agency that administers Medicaid in NY for a definite answer, but I would be fairly confident that whoever pays the premiums is not relevant. It is ownership and control of the policy that matters.

[Betty]

Originally Posted by anteater

but I would be fairly confident that whoever pays the premiums is not relevant. It is ownership and control of the policy that matters.

You are absolutely correct.