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Mom is in a nursing home now and money is getting low. I need to know if I should cash this policy in and pay for her funeral now or leave it the way it is. Right now the funeral home is the beneficiary.

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Point taken.
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Owners can change the beneficiary whenever they want. I'm sure the state doesn't want to keep checking to see if it has been changed after someone has become eligible.
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How large is the policy? If it will just cover funeral expenses, don't worry about it. I was told funeral expenses cover the funeral homes work, the flowers, the stone, plot, luncheon...anything to do with the funeral. Did you check with the funeral home to see if Mom already prepaid and this is how payment was handled? I set up Moms and the money was put into a trust. But in some instances, a policy can be transferred to a funeral home which is what ur Mom may have done when she prepaid. My funeral home wouldn't do this so I had to cash in the policy. As said, anything left over will go to Medicaid. This is what I have never understood about Medicaid. A person has a large insurance policy and they are required to cash it in for a lot less than face value. Why doesn't Medicaid require they become first beneficiary and receive the face value and what is left over go back to the person's estate. This way they will get back a lot more.
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I believe when I read the assets exclusion list prepaid funeral was on it, I think that they may want any money not spent on funeral though. Check the website for exclusion list. Also, aren't there penalties for cashing in a life insurance policy? You might get stuck twice, penalties then Medicaid wanting excess looking at full policy value.
God bless you in this trying time.
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Who is the owner of the policy, you or mom? If you're not the owner you aren't doing anything.
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I don't know if Medicaid will take the money or not. Can you call them anonymously and ask?
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