by dbstevens04 » Mon May 06, 2013 05:59 pm
As power of attorney for my elderly, ill parent (insured), I was required to request Cash Value of his life insurance policy to obtain Medicaid assistance. The insured died 2 weeks before the company issued and mailed the Cash Value check . The check was made out to POA (which ends at death). Can I request the Death Benefit since Cash Value ceases to exist as soon as the owner of the plan expires?
Posted: Mon May 06, 2013 08:32 pm Post Subject:
Great question. What exactly did you do? Did you cancel the policy and ask them to send you a check? Or did you just take out enough out of the policy so that it wouldn't stop them from qualifying for Medicaid? Or did you do something else?
It sounds to me, unfortunately, that the insured died after the policy was canceled. However, maybe the insured died after the request, but before the policy was actually cancelled.
My suggestion would be not to immediately tell the insurance company that the insured died. Instead, I would find out the last day that the policy was in force. Get this in writing. You may get lucky and have that day be after the death of the insured. If that is the case, I believe that they will owe the beneficiary the death benefit.
Posted: Tue May 07, 2013 11:10 pm Post Subject: Cash Value vs Death Benefit
Thanks so much jfavmakru for your helpful reply. I took your advice, called the insurance company and, although I did surrender the policy 2 weeks prior to his death, I found out the policy was in force until 2 days after my father's death. I'm sending a request in writing from the company stating that. Even if it takes a letter from an attorney, at least I'll have that vital information to make the case for payout of the Death Benefit. Thank you again!
Posted: Thu May 09, 2013 02:57 pm Post Subject:
Try to get something in writing showing the last day that the policy was in force before you let them know that the insured is dead.
Posted: Thu May 16, 2013 02:15 pm Post Subject:
I found out the policy was in force until 2 days after my father's death.
Try to get something in writing showing the last day that the policy was in force
The timing is very tight indeed.
before you let them know that the insured is dead.
I think it's too late for this, however.although I did surrender the policy 2 weeks prior to his death
This is going to be the sticking point. Does the policy surrender happen when the check is written or when the request is received? Without something in writing to confirm the actual end date of the policy in comparison to the death date of the insured, the matter is potentially headed to a court for adjudication.Posted: Thu May 16, 2013 02:25 pm Post Subject:
I was required to request Cash Value of his life insurance policy to obtain Medicaid assistance
Here's where people need to know what is and is not required when attempting to qualify for Medicaid.
YOU ARE NOT REQUIRED TO SURRENDER A CASH VALUE POLICY. You may borrow or withdraw (depending on the type of policy) the cash surrender value necessary to meet the Medicaid spend down tests.
Medicaid rules currently permit the retention of $1500 in cash value in a policy. In some cases, that will be enough to pay for most of the cost of cremation, if that also happens to be the remaining death benefit amount of the policy. It would also be enough to pay at least the first year's loan interest in most cases, if not deducted from the loan proceeds in advance.
UL policies (and some whole life policies) permit partial surrenders (also called withdrawals), which would be preferable to a loan in cases like this. While a loan may be repaid, a withdrawal cannot. A loan bears annual interest (in advance or arrears), which can eventually cause a policy to lapse if unpaid. A partial surrender simply reduces the death benefit dollar-for-dollar by the amount surrendered, but the policy would never lapse.
As long as the policy remains in force, the death benefit remains payable. Medicaid has no claim to death benefits, but they do have the right to recover assets from the estate, so as long as the death benefit is paid to anyone other than the estate, the money cannot be attacked directly by Medicaid. In certain circumstances, an individual can become responsible for the asset recovery for a deceased Medicaid recipient.
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