Will my dad’s life insurance policy disqualify him?

Will my dad’s life insurance policy disqualify him?

Short answer: Term life insurance does not count. Whole or universal life policies with cash value may count if their total face value is over $1,500 in most states.

Figures change periodically. Double-check current amounts before relying on them.

Term life insurance has no cash value, so it is not a countable asset.

Whole life, universal life and other cash value policies are treated differently. Under the SSI-based rules most states use:

  • if the total face value of all cash value policies on the person is $1,500 or less, the policies are excluded;
  • if the total face value is over $1,500, the cash surrender value counts as an asset.

Some states use different limits.

Example. Your dad has a whole life policy with a $10,000 face value and $6,200 cash value. Because the face value is over $1,500, the $6,200 counts toward his asset limit.

Options include surrendering the policy for its cash value and spending it in allowed ways, using the cash value to fund an irrevocable funeral plan (in many states, policies can be assigned to a funeral home), or, in some cases, transferring ownership to an irrevocable funeral trust. Transferring the policy to a child is a transfer that can cause a penalty.

Ask the insurer for a current statement of face value and cash surrender value.

Getting help

Every situation is different, and small facts can change the answer. If this question affects a real decision, especially with a spouse at home, a home, gifts or a trust, a Certified Medicaid Planner can apply your state’s rules to your situation. As a rough guide, published fees for help with an application range from about $500 to $6,000, and hourly help from about $150 to $600.

Last updated for 2026. General information only, not legal or financial advice. Medicaid Answers is a free educational resource published by Medicaid Answers Foundation.

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