WAG 07-02-07-a
Customers can irrevocably assign an existing life insurance policy to a funeral home to fund an irrevocable prepaid burial contract. This irrevocable assignment of a life insurance policy is exempt and considered an allowable transfer.
In order for the assignment of the life insurance policy to be exempt as a countable asset, HFS 3195 Irrevocable Assignment of Benefits of Life Insurance Policy form has to be completed and signed. The form is located on the HFS website.
The following information is needed on the form:
- Name of insured
- Name of policy owner
- Insurer
- Policy number
- Date the assignment took place
- Address
- Funeral home the life insurance was irrevocable assigned
- Funeral home representative
- Address of the funeral home
- Signature of the policy owner or Power of Attorney
The irrevocable assignment includes:
- Irrevocably assigns and transfers all the benefits and proceeds of the life insurance policy to the funeral home.
- The cash value is not counted as an available asset.
- The life insurance cannot be canceled.
- The owner of the policy irrevocably waives their rights below:
- The owner cannot collect proceeds of the policy,
- The right to surrender the policy and receive the cash value of the surrendered policy,
- The right to obtain a policy loan,
- The right to designate a primary beneficiary other than the funeral home, and
- The right to collect or receive income, distributions or share of the surplus, dividend deposits, refunds of premium, or addition to the policy.
- The owner of the policy can ONLY change the assignee to another funeral home.
- Any policy proceeds remaining after payment to the funeral home for funeral goods and services is paid to the Technical Recovery Department of the Illinois Department of Healthcare & Family Services to the extent of medical services expended on the deceased customer.
More than one life insurance policy can be used if the total face value of the polices is necessary to pay the amount described in the contract with the funeral home. To be exempt, the HFS 3195 form must be completed for every life insurance policy assignment.
- Policies that are NOT necessary to pay the amount described in the contract are NOT exempt.
The assignment represents the transfer of resources. This is an allowable transfer of assets and should not result in a penalty period.
To be considered exempt, the life insurance has to be irrevocably assigned to the funeral home to fund an irrevocable pre-paid burial on or after 05/27/2022. The life insurance policy, prepaid burial contract and HFS form must also state that, upon the death of the person, the State will receive all amounts remaining of the life insurance to an amount equal to the total medical assistance paid on the person's behalf. The HFS 3195 form must be completed and signed by all applicable parties.
