Does nursing home get the life insurance proceeds?

[floridaladyagent]

What happens to life insurance policies when insured enters nursing home?
Disabled senior recently placed in nursing home. She is mentally unable to sign or even understand. Her elderly sister is owner of old policy on her for $2,000. Does the sister still have any claim to this policy or is it now allocated to the nursing home....and what do they do next, please. Sister considers cashing it in, if possible.

Actually, I did search nursing home here in the forum, but so far have not found an answer. I imagine this is a common situation.

Thank you.

 

[theleadingagent]

So this is a permanent policy with cash value?

From my understanding owners of policies with cash value have ability to access said cash value.

Why not call the insurance carrier the policy is with to find out.

 

[floridaladyagent]

Thanks for your response, theleadingagent. That is what I will advise her to do.
What if the owner is the insured, who is in the nursing home, I wonder. Not in this case because the insured is incompetent now, but in general.
I thought I remembered something about life insurance, and nursing homes somehow being involved.

 

[WinoBlues]

Her elderly sister is owner of old policy on her for $2,000.

The insured has no rights or claim. The policy is the property of the sister that owns it. She can cash it in, put it on reduced paid-up, extended-term or assign ownership to someone else. Or of course just continue to pay it.

 

[floridaladyagent]

Thank you, WinoBlues. That helps me understand that the owner has the right to do whatever. And the nursing home can't expect funds from that policy.

 

[rousemark]

Thank you, WinoBlues. That helps me understand that the owner has the right to do whatever. And the nursing home can't expect funds from that policy.

The only problem would be if the old sister ends up in the nursing home on Medicaid.. Then the policy is counted as her asset.

 

[floridaladyagent]

Oh, good one, rousemark. That's a really important issue to consider.

 

[floridaladyagent]

So if an insured is also the owner of a cash value policy...does it have to be paid up before the nursing home considers it an asset if said person goes on Medicaid? What if it is a term policy that has a few years yet, and it can continue to be paid?
The beneficiary is now out of the picture?
Does anyone know where I can learn more about this subject? Besides here, that is. This is something I am interested in.
Thank you.

 

[floridaladyagent]

Understood, rousemark. Thank you.

 

[rousemark]

Understood, rousemark. Thank you.

Here .. This will explain it in detail.. My earlier post was not complete so I deleted it.

Do Life Insurance Policies Affect Medicaid Eligibility? - AgingCare.com