My dad has life insurance through the VA. 10K term life and a little more than 20K whole life. I know that for Medicaid, only the cash value of the whole life counts as an asset (since term doesn't build cash value).
Several years ago he took out a car loan against the life insurance. He explained to me that when he died, the car loan plus any accrued interest would be deducted from the life insurance payout. The current loan value is 8,300, and the current cash value of the whole life is 9,300.
Would the value of the loan be evenly split between the term and whole life policies? Or since the whole life is 2/3 of the entire amount, would 2/3 of the loan (about 5,500) be deducted from the current cash value? Or would Medicaid not take into account the loan, and use the entire current cash value in their determination?
Thank you for any assistance provided!