I would ask an insurance agent before I did anything. There are so many different types of policies. You might have the option to convert to a term life or sell it as igloo572 suggests.
Im assuming this is about LTC NH Medicaid for your mom/dad, right? Like need to be in living in a facility & are looking to Medicaid to pay.
if so, whole life policy will have a “cash value”. As such it’s an asset for how LTC Medicaid looks at thier resources. Medicaid is going to expect the policy to be cashed in and then used in a spend down till they become impoverished to be eligible for Medicaid. For individual LTC Medicaid their nonexempt assets are max 2k; for couples it’s more and way way more complicated as they can have assets shifted to the staying in the community spouse.
Personally to me if you absolutely know for sure mom or dad has a whole life policy, and it’s not huge $, I’d try to get them to cash it in BEFORE ever filing a Medicaid application. It will be less paperwork and they won’t go thru the eligible / not eligible/ once again eligible yo-yo if they apply now, then do the cash out and have to reapply. This way they or you as thier dPOA use the $ for a spend down that’s ok for Medicaid rules for your state. Most insurance co have on-line to start the process on doing cash out. There could be small fee. It could take 3-6 weeks.
If it’s actually a big $$$ policy, like over 500k/1M, that’s a whole different creature to deal with. Those are viatical settlements territory and you might be able to get several bids from investors who want to buy the policy. These will need oodles of paperwork to determine risk. I would not try to diy one of these but work with a broker.
$ must be used for their care or needs. No gifting. No transfers to others.
If they are already in a facility, and this is a smaller life insurance policy (under 50k), you might want to speak with biz office as to if might be lower private pay rate if mom was to sign over the policy to them to be used as a draw.
Please make absolutely sure it is whole life and not term. If it’s term, those do not have to get cashed out; term is based on the “face value” even if the old, paid up & now worth way way more than the face value.
Is the person already on Medicaid? didn't this have to be disclosed? Generally, the policy has to be cashed in or sold for fair market value, and the cash used for care of the person
Look at evaluatelifeinsurance.org for more ideas.
Like need to be in living in a facility & are looking to Medicaid to pay.
if so, whole life policy will have a “cash value”. As such it’s an asset for how LTC Medicaid looks at thier resources. Medicaid is going to expect the policy to be cashed in and then used in a spend down till they become impoverished to be eligible for Medicaid. For individual LTC Medicaid their nonexempt assets are max 2k; for couples it’s more and way way more complicated as they can have assets shifted to the staying in the community spouse.
Personally to me if you absolutely know for sure mom or dad has a whole life policy, and it’s not huge $, I’d try to get them to cash it in BEFORE ever filing a Medicaid application. It will be less paperwork and they won’t go thru the eligible / not eligible/ once again eligible yo-yo if they apply now, then do the cash out and have to reapply. This way they or you as thier dPOA use the $ for a spend down that’s ok for Medicaid rules for your state. Most insurance co have on-line to start the process on doing cash out. There could be small fee. It could take 3-6 weeks.
If it’s actually a big $$$ policy, like over 500k/1M, that’s a whole different creature to deal with. Those are viatical settlements territory and you might be able to get several bids from investors who want to buy the policy. These will need oodles of paperwork to determine risk. I would not try to diy one of these but work with a broker.
$ must be used for their care or needs. No gifting. No transfers to others.
If they are already in a facility, and this is a smaller life insurance policy (under 50k), you might want to speak with biz office as to if might be lower private pay rate if mom was to sign over the policy to them to be used as a draw.
Please make absolutely sure it is whole life and not term. If it’s term, those do not have to get cashed out; term is based on the “face value” even if the old, paid up & now worth way way more than the face value.