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Title 8: Medicaid Page 110 Iowa Department of Health and Human Services Employees’ Manual Chapter D: Resources Specific Non-MAGI-Related Resources Revised July 10, 2026 Insurance (Life)

Insurance (Life) (Cont.) Mr. B has a $1,000 whole life policy that he purchased in 1942. His dividends purchased an extra $3,000 in face value in 1976. Now, the total face value of the policy is $4,000, the cash value is $2,800, and dividends are $800.

Because the policy’s face value, (not including the face value due to insurance purchased with dividends) is less than $1,500, the cash value is excluded. However, the $800 in dividends that were not used to buy additional insurance are countable resources.

Dividend accumulations may be considered as cash set aside for burial if all burial fund criteria are met. Do not automatically assume that the dividends are set aside for burial because the cash value of the life insurance is designated for burial.

If the life insurance policy is assigned to the funeral home in an irrevocable burial contract, do not count the cash value or the dividends as a resource.

If the funeral home is the beneficiary, the cash value of the policy may still be counted as a resource unless otherwise excluded. If the funeral home is the beneficiary and the client has an irrevocable burial contract, do not count the cash value of the policy, but count any accessible dividends as a resource to the client.

At the time of application the cash value can be verified by obtaining the cash surrender value page of the policy or verification from the company. Accept the cash value table when the individual is under the resource limit and the surrender value is not questionable. If further verification is needed, 470-0444 Insurance report can be used to verify the:

 Total face value of the whole life insurance policy not including dividend additions.

 Amount of accumulated dividends not used to purchase additional insurance.  Interest earned on accumulated dividends.