Life & Health Insurance/Whole Life Insurance
Hello - Thank you for volunteering your time.
My mother is 82 and has two life insurance policies. One is Whole life and it is clear how much the value is (Death benefit $5175.00) and how much net cash value is ($3780.65).
The other is called Limited Payment WL @ 95. It is a 5,000 policy that has a maturity date of 4/14/2034. Can you explain what Life Paid UP at 95 means?
She is running out of money and we are looking to prepay funeral expenses in case she needs to go on Medicaid since we understand that life insurance is considered an asset.
Thank you for your assistance.
If your Mom is in reasonable health, you may be able to transfer ownership over to the beneficiaries soon enough to avoid the Medicaid regulations.
Paid Up at 95 simply means that no more premiums will come due on the anniversary nearest age 95. I calculated this policy to last to age 100. If she reaches that age, it may be a requirement that the insurance company write a check for the Face Amount plus any dividends minus any outstanding loans. Depending on the amount of premiums paid, there may be some income tax on the amount paid in excess of the premiums received by the company.
If you can borrow enough from one of the policies to prepay the expenses and keep the policy in force, I believe you might fulfill the Medicaid requirement.
Willard R Brumbaugh, LUTCF
CA License 0374776