WAG 07-03-06.

Except for the following life insurance policies, the cash value of any policy owned by a client is a nonexempt asset that is applied to the asset limit.

  • Group policies provided by an employer.
  • Group policies required for employment.
  • Policies on the life of an ineligible family member.
  • Policies on the life of an eligible client owned by someone other than the client. This disregard does not apply to policies insuring children when the policies are owned by the children's parent who is living in the home.

When it appears that an insured client is eligible for disability benefits through a health and accident or life insurance policy, the client must apply for the benefits. If the client fails or refuses to apply for the benefits, the client is ineligible.

Disability benefits paid from a life insurance policy are nonexempt income, whether paid monthly, quarterly, annually, or in a lump sum.

Insured clients must provide information on the current beneficiary of any life insurance policy. The client must also provide information on burial plans, preference of funeral director, and ownership of cemetery lot or burial place.

If the beneficiary of a client's life insurance policy is a responsible relative, the proceeds from the policy must be used for the client's funeral, burial, and related expenses. HFS may pay any remaining costs up to the maximum allowed (see PM 22-06-02). Other beneficiaries do not have use their insurance proceeds for the client's funeral/burial expenses.