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16.7.4 Reserved 16.7.5 Life Insurance The cash surrender value (CSV) of life insurance is a countable asset. However, there is a limited exception to this rule: For a person who is aged 65 or older, blind, or disabled, the CSV of their life insurance is only counted if the total face value (FV) of all life insurance policies owned by that person exceeds $1,500. The CSV is the amount that the insurer will pay upon cancellation of the policy before death of the insured or before maturity of the policy. The FV is the amount that is contracted for when the life insurance policy is purchased. It may be described on the policy as the "face value," "amount of insurance," "amount of this policy," "sum insured," or a similar term. For each person who is aged 65 or older, blind, or disabled, it must be determined if the total FV of all life insurance policies owned by that individual is greater than $1,500. When the total FV is determined, the following must not be included: • The FV of any insurance policy that has no CSV, such as burial insurance and most term life insurance. • The value of any dividend additions. Dividend additions are increases in coverage purchased using dividends generated by the policy. They are often referred to as "paid-up additions" or "paid-up additional insurance." • Additional sums payable because of special provisions or riders. Riders are modifications the policy owner adds to the life insurance policy at the time of purchase. A common example is accidental death. If the total FV of the life insurance owned by a person who is aged 65 or older, blind, or disabled is $1,500 or less, the CSV of any life insurance policy owned by that person is an exempt asset, including the CSV of any dividend additions. For life insurance policies that cannot be excluded under the limited exception, the CSV of the policy, including the CSV or any dividend additions, is a countable asset. Exampl e 3 Steve (aged 67) and Mary (aged 63) are married. Steve is applying for Medicaid. Both individuals have whole life policies in which dividends are used to purchase individual coverage on the policy ("paid-up additions"). Policy Owner Face Value Cash Surrender Value Dividends Riders Whole Life Steve $1,500 6,700 (including CSV of paid-up addition) Used to purchase additional coverage on the policy $25,000 accid death Term life Steve $250,000 $0 N/A N/A Whole life Mary $5,200 $12,700 (including CSV of paid-up additions) Used to purchase additional coverage on the policy $15,000 accid death

The total FV of life insurance policies owned by Steve is not greater than $1,500, so the $6,700 CSV of Steve's whole life insurance must be disregarded for his eligibility determination. The accidental death rider and Steve's term life policy are not counted when determining the total FV.