The CAO must identify and verify life insurance owned by a budget group member or a legally responsible relative (LRR) living with the budget group. The CAO must not count the face or cash surrender value of these policies as a resource of the budget group in determining eligibility. The CAO must count the cash received at the time the policy is cashed in as a resource, if it is not otherwise exempt.
The CAO must explore the possibility that there may be life insurance other than individual policies. This may be the case if the person is or was:
employed;
a member of a lodge or fraternal order;
a member of a union; or
a veteran.
Types of Life Insurance Policies:
Term life insurance – policies that last a specific amount of time (term) and is guaranteed a death benefit to the beneficiary, if the owner passes away during that term. Term life insurance does not have a cash value.
Term life insurance may also be known as level term or level-premium, a yearly renewable term and decreasing term.
Whole life insurance – life insurance that pays a benefit on the death of the insured individual and accumulates a cash value.
Whole life insurance may also be known as universal life insurance, variable life insurance and survivorship life insurance.
Revised August 28, 2020, replacing September 20, 2012.