Is it legal to purchase life insurance for my Mom who is in residential care home with her money? - AgingCare.com

Is it legal to purchase life insurance for my Mom who is in residential care home with her money?

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Mom always felt she should have enough in the bank to cover burial cost. However I see Care and medical quickly taking over.

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If your mother has cognitive capacity she can certainly enter into contracts and agreements herself. If she does not, you can enter into contracts and agreements for her only if you have Power of Attorney.

Your question may also be with respect to Medicaid eligibility and the purchase of life insurance. How life insurance is treated as an asset varies by state and the face amount/cash value permitted is usually quite low.

There are, however, several ways to prepay funeral expenses that will not impact Medicaid eligibility.
1. Prepay funeral expenses by contract with the provider(s). If the contract is made irrevocable the value of the contract will not be countable as an asset.
2. Fund an Irrevocable Life Insurance Trust. This may or may not be funded with life insurance. Most states have a limit of the amount that can transferred to such an arrangement...usually about $12,000.
3. Some states, in addition to the above, permit a separate bank account to be established as a "burial fund". The contribution permitted varies between $1,500 and $2,500.

Be wary of buying "burial insurance" as seen on TV as it may not be an exempt for Medicaid eligibility purposes.
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In FL you can make arrangements and pay ahead of time. It would probably be more cost effective than purchasing a life insurance policy at this point in time.
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She is at this point, uninsurable. Don't believe the ads that offer big policies with no physical.
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That's a delicate question. Is your mom in a facility or out now? Are you her power of attorney, legal guardian, or other designation? What is her medical diagnosis? Is she expected to live longer than 2 years? I'd go to the free legal advice agency in your area. Call your state social services to find out where they are or call the Local Office of the Aging for more detailed advice. Let us know how it works out.
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It may be a moot point. Have you priced the premium on life insurance for someone who's already in assisted living? It probably makes a lot more sense to just pre-pay her burial, which is something Medicaid allows someone to do when they're spending down anyway.
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IsntEasy is absolutely correct! Even a healthy person, of a certain age, will have great difficulty finding insurance that would be worth purchasing. Read the fine print!!!
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Final Expense - Irrevocable Insurance or a Pre-Paid funeral account with your area funeral director is best (in my opinion). Medicaid doesn't mind if you "purchase" life insurance, it just needs to not be an ASSET, which means the funeral home would be the owner/beneficiary of the proceeds - based on the cost of the funeral/cremation you choose for her...
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Mom can buy a pre need funeral & burial policy now. If its NCV - no cash value then it's ok for Medicaid. Some states limit them to a maximum amount - maybe 7K or 10K - the FH will know how to structure this.

Depending on moms age, she may be able to do this on a monthly payment plan. Problem with this is IF mom goes onto Medicaid in the future she will not have the income to make the policy payment. So it will fall to family to pay it to keep policy in force. It would probably be better to do a lump sum totally paid policy.

Funeral & burial can be very expensive so try to be pragmatic in this.
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Final Expense/Pre-paid thru the funeral home = a prepayment process option.
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We were told to purchase a burial plan for my mother prior to applying for Medi Cal. She had already purchased her burial plot in 1960 when her brother died building Dodgers Stadium. We just went ahead an purchased it before all her money was gone.
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