Does a cash value life insurance get considered when figuring assets for Medicaid

Q) My parents live in Illinois and my mom needs to apply for Medicaid to go to a nursing home. My father will continue to live in their home. There assets will not be over the threshold. Does a small cash value of a life insurance policy just get considered when figuring their assets or will Medicaid take the cash value amount and then the life insurance policy will be surrendered and no longer in effect.

A) Yes, the cash value of a life insurance policy is considered an asset when determining Medicaid eligibility. The cash value is the amount of money that you have accumulated in your life insurance policy, minus any outstanding loans or debts. If you have a cash value life insurance policy, you may be able to keep it and still qualify for Medicaid, but you will need to have the cash value counted as an asset.

There are a few exceptions to this rule. For example, if you have a life insurance policy that was purchased before you applied for Medicaid, the cash value may not be counted as an asset. You should contact your state’s Medicaid office to find out more about the specific rules in your state.

If you are concerned about the impact of your life insurance policy on your Medicaid eligibility, you should talk to a Medicaid planning specialist. A Medicaid planning specialist can help you understand the rules in your state and develop a plan to maximize your chances of qualifying for Medicaid.


A whole life insurance policy has a cash value and can count as an asset. If your overall cash value puts assets above the Medicaid resource limit, then that could potentially make your mom ineligible for Medicaid. You may consider to make sure that her estate is not the beneficiary of her life insurance policy. The Medicaid program will seek to take money from her estate, and this cannot be conducted if she choose to change the beneficiary of her policy. Therefore, instead of listing her estate as a life insurance beneficiary, she may consider listing an individual or individuals that will receive her life insurance policy proceeds. Remember it’s always best to get legal advise on this issue.

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