Page 30

Chapter: 1600 Assets Program: MSSI, SFP 26

1640.0551 Life Estate Interest (MSSI, SFP) Any life estate interest held by an individual, the individual’s spouse, a child or specified relative is excluded as an asset to the individual. Also, transfers of life estates need not be examined for potential penalties.

Life estate received as a result of a transfer within 60 months of application for institutional care or HCBS must be evaluated under the transfer of assets policies.

Although individuals owning life estates have the right to obtain profits from the estate property they do not have exclusive rights to the benefits of the property. Therefore, only that portion of the income made available to the individual will be counted as income to the individual. 1640.0554 Life Insurance (MSSI, SFP) A life insurance policy is considered only to the extent of its cash surrender value. However, if the face value of all life insurance policies on any one individual totals $2,500 or less, no part of the cash surrender value of any such policy or policies will be taken into account. Life insurance having no cash surrender value (for example, term insurance or burial insurance) is not considered in determining the face value of insurance and is excluded from all computations.

The policy must be owned by the individual or the person whose assets are deemed to the individual to be considered a countable asset to the individual.

When the total face value of all life insurance policies on an eligible individual, or an eligible/ineligible spouse whose assets are deemed to the eligible individual exceed $2,500, the cash surrender values of all such policies must be counted as assets. When the cash surrender values of such policies exceed the asset limitation, an individual may adjust his insurance holdings to policies of a reduced face value. If an adjustment is made, the life insurance policies (and any cash adjustments) are reconsidered in determining eligibility.

The exclusion of a $2,500 face value insurance policy applies to each individual separately. One family member cannot be insured for the total of the amounts allowed for other family members. For example, in the case of a couple, one spouse cannot be insured for $5,000 based on the assumption that the couple is allowed a total of $5,000 in life insurance. 1640.0555 Verification of Life Insurance (MSSI, SFP) The individual must provide the following information on life insurance policies

1. the owner of the policy; 2. the individual insured by the policy; 3. the amount of the policy's cash surrender value, if any; and 4. the amount of any dividends or interest earned on this policy.

The life insurance policy may provide all the necessary information. If not, the information may be obtained from the insurance company or a local agent. However, with the exception of the MSSI and SFP Programs, it is not necessary to see the policy(s) or contact the company unless the cash value must be verified. 1640.0556 Loans (MSSI, SFP) A loan is a transaction when one party (lender) advances money to another party (borrower) who promises to repay the debt in full within the borrower's lifetime. Repayment of loans may or may not include interest. A loan may take the form of a formal written document or an informal verbal agreement. A formal written loan agreement is a form of a promissory note.

A promissory note is a written, unconditional agreement signed by a person who promises to pay a specific sum of money at a specified time, or on demand, to the person, company,