Page 41

h. Life Insurance Policy. A contract between the policy holder and an insurer in which the insurer agrees to pay a designated beneficiary a sum of money in exchange for a premium, upon the death of the insured person – in this case the applicant/beneficiary (often the policy holder). Whole life insurance is permanent and builds cash value over the insured person’s lifetime because it has an added investment component along with its death benefit. The value of a whole life insurance policy is only counted if the person, or the person’s spouse (couple) is the owner. Policies on the life of a person or applicant’s spouse owned by another member of the FRU are not considered even when deeming applies (non-LTSS). Whether a policy is counted as a resource depends on two (2) factors: (1) Cash surrender value. Cash surrender value is the amount which the insurer will pay (usually to the owner) upon cancellation of the policy before death of the insured or before maturity of the policy. (2) Face value. Face value is the basic death benefit of the policy exclusive of dividend additions or additional amounts payable because of accidental death or under other special provision. (3) Counting rule. If the total face value of all life insurance policies on any person is at or below four thousand dollars ($4,000.00), no part of the cash surrender value of the life insurance is included when determining countable resources. If the face value is above four thousand dollars ($4,000.00) only the cash surrender value above four thousand dollars ($4,000.00) is a countable resource. The total amount of the cash surrender value above four thousand dollars ($4,000.00) is added to all other countable resources when determining whether an applicant or beneficiary is at or below the resource limit for Medicaid financial eligibility. The cash surrender value below four thousand dollars ($4,000.00) is treated as an unavailable resource unless or until the policy is cashed out. Term insurance and burial insurance are not taken into account. 2. Liquid Resources – A liquid resource is cash or other property that can be converted to cash within twenty (20) business days. Accounts in financial institutions; retirement funds; stocks, bonds, mutual funds, and money market funds; annuities; mortgages and promissory notes; and home equity conversion plans, described below, are some of the more common kinds of liquid resources.