Funeral Trust Vs Final Expense Plan

[eagles12]

I received a call from a caseworker who wants her 64-yr old client to purchase a funeral trust plan. Her client suffers from some form of mental illness. Other than that , he is healthy. He has $1500 for the trust
Would this client be better served with a non-underwritten final expense plan?

Thanks.

 

[Newby]

I received a call from a caseworker who wants her 64-yr old client to purchase a funeral trust plan. Her client suffers from some form of mental illness. Other than that , he is healthy. He has $1500 for the trust Would this client be better served with a non-underwritten final expense plan? Thanks.

A funeral trust can be an FE plan. Just write them Settlers and fill out the extra funeral trust form.

A funeral trust is just an extra legal document where they give up the right to use it for anything other than funeral expenses. Makes it exempt from Medicaid.

 

[eagles12]

Thank you for the info. Unfortunately, Settlers is not available in the state of Oregon. Is there another funeral trust available? Or would you suggest I pick another FE plan ie Equitable or Sentinel?

again, thank you.

 

[midwestbroker]

In some states, having a whole life insurance policy may effect their Medicaid status.

I have had cases in MO where someone was on Medicaid and wanted to purchase a FE plan. Their case worker advised against it as the policy will build cash value (mind you very limited cash value) and they would have to forfeit the policy. Is that 100% accurate? I cannot say but most Medicaid beneficiaries will take the word of their case worker over an insurance agent.

Mind you I have called a couple different case workers with the same question and received different answers, but that is just how the system is (at least in MO).

 

[Newby]

In some states, having a whole life insurance policy may effect their Medicaid status.

I have had cases in MO where someone was on Medicaid and wanted to purchase a FE plan. Their case worker advised against it as the policy will build cash value (mind you very limited cash value) and they would have to forfeit the policy. Is that 100% accurate? I cannot say but most Medicaid beneficiaries will take the word of their case worker over an insurance agent.

Mind you I have called a couple different case workers with the same question and received different answers, but that is just how the system is (at least in MO).

Yes that is correct. But just sell the Settlers policy with the funeral trust and you are fine. Or the NGL version.

If Settlers isn't in your state if they want to buy an FE policy, just have another family member as the owner from day one and you should be fine.

If all else fails, send them to the funeral home for a real funeral policy. That's what the caseworker is familiar with.

 

[GoPokes]

Thank you for the info. Unfortunately, Settlers is not available in the state of Oregon. Is there another funeral trust available? Or would you suggest I pick another FE plan ie Equitable or Sentinel?

again, thank you.

I have a funeral trust appointment with Unity Financial. I don't sell it very often (last one I did was a few years ago). They seem to know their stuff pretty well, you might check them out.

 

[Newby]

I have a funeral trust appointment with Unity Financial. I don't sell it very often (last one I did was a few years ago). They seem to know their stuff pretty well, you might check them out.

Is Unity a single pay only or do they have a monthly premium option?

 

[GoPokes]

Is Unity a single pay only or do they have a monthly premium option?

Great question. They just recently introduced a monthly pay option, they have had a single pay for a long time.

 

[jdeasy]

In some states, having a whole life insurance policy may effect their Medicaid status.

I have had cases in MO where someone was on Medicaid and wanted to purchase a FE plan. Their case worker advised against it as the policy will build cash value (mind you very limited cash value) and they would have to forfeit the policy. Is that 100% accurate? I cannot say but most Medicaid beneficiaries will take the word of their case worker over an insurance agent.

Mind you I have called a couple different case workers with the same question and received different answers, but that is just how the system is (at least in MO).

That's kinda right and kinda wrong. Maybe not wrong, but incomplete?

Definitely right on the case workers being clueless and the person will listen to them anyway. Just had a call last week where a case worker told the lady the maximum is $500 in cash value she can have. I was able to remedy that one.

Insurance that builds cash value could affect a person's medicaid in ALL states. Not just whole life, any plan that builds cash value.

It has nothing to do with the insurance. It's the cash. The cash value is a "countable asset". Most states you are allowed $1500 in countable assets without affecting your medicaid status. Some states it's $2000.

That's basically liquid assets. Like the money in an annuity, {providing a medicaid person has an annuity??}, any penalty free distribution they can take is a countable asset.

The cash value in an insurance policy is available to the owner so it's countable. Your savings account, your checking account, your cookie jar money, {if you disclose it?}, are all countable assets. If the total of all that is over $1500 or $2000 then you are not eligible for medicaid that month or any month when it's over that threshold.

it doesn't matter if the cash value is $1400 if that's the only countable asset you have.

To avoid any problems just have another person be the owner of the policy from day one. Just make sure that person is not also on medicaid. The cash value is only a countable asset to the owner of the policy. Or put it in a funeral trust or assign ownership to a funeral home.

Most states have a limit on what can be protected in a trust to be exempt from medicaid. I work Ky and Indiana so I know that Indiana's limit is $10,000 and Ky's is $15,000.