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question:
if an individual is in a nursing home and has a whole life policy, can the nursing home use any dividends that they are receiving as income and take it? thanks!
............The result will be that the person has to cash surrender the policy or assign ownership of it to a funeral home. If the funeral home owns the policy they will have the dividends buy additional paid up insurance.
so if they have a nice size policy and are receiving any kind of dividends then it is subject to be used by the nursing facility as income from that individual am I understanding this correctly? One of their alternatives is to assign ownership to a funeral home? So any dividends that were to be received would then go to the funeral home? I don't know if I like that answer! What about the beneficiaries? Since the ownership changed, then the beneficiaries would change and the only thing that would be constant would be the person that is being insured. Right?
No. The ownership goes to the FH. No more dividends to the insured. The FH gets the cost of the funeral (goods and services) and SS gets the balance of the policy.
previously posted by WinoBlues
First of all, if a WL policy is earning dividends, those dividends are usually left in the policy for additional paid-up insurance. So, the chances are the policyholder would not physically receive those dividends. However, if there's a Medicaid situation involved, those dividends are now considered as countable income and would have to be spent-down towards the cost of care.
second point:
In the case of making the FH an owner. Why would you do that? If anything, you would make the FH a beneficiary. And, you would leave the FH only enough money to cover the cost of the funeral. If the policy has a $100,000 death benefit and the cost of the funeral is $10,000, the other $90,000 should be left to someone else.
But, we're discussing cash-value and whatever that amount is (obviously less than the death benefit) that amount is considered a countable asset.
The cash value, according to Medicaid, must be spent down prior to Medicaid Qualification, it is not given to Social Security (as you stated) and it's not given to Mediciad either. It's given (in this case to the policyholder) and is considered a countable asset.
I'm not certain who the OP is and what his/her part in this and why the question was generated in the first place?