What happens to a life insurance payout after a medical assistance patient dies?
judson asked:
Say my parent has a life insurance policy, but depletes their assets and becomes eligible for medical assistance to pay for nursing home or medical costs. What happens to the payout to the beneficiary after that person’s death? Is it even worth keeping up such a policy in that case? Thanks.
Say my parent has a life insurance policy, but depletes their assets and becomes eligible for medical assistance to pay for nursing home or medical costs. What happens to the payout to the beneficiary after that person’s death? Is it even worth keeping up such a policy in that case? Thanks.
Posted in Life Insurance FAQ
Nothing changes. The life insurance policy pays the stated benefit directly to the named beneficiary. It has nothing to do with wills, the person’s estate. or other debts.
Nothing happens to the payout to the beneficiary. When the beneficiary gets the money, it’s their’s.
If the beneficiary is the estate of the deceased, it can be used to reimburse the medical assistance costs.
Remember, life insurance benefits the survivor, not the deceased. The benefits are paid to survivors for the lost income or expenses the survivor incurs when someone dies. That is why the money is paid tax free. The benefit is paid to make you whole, not for a gain.