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Can you have life insurance while on medicaid?

If you’re on Medicaid, you might be wondering whether owning life insurance will affect your eligibility. The short answer? Yes, you can have life insurance while on Medicaid — but the type and value of the policy matter.

How Life Insurance Affects Medicaid Eligibility

Medicaid is a needs-based program, so it considers your income and assets. Life insurance policies can count as assets, depending on the type and cash value:

  • Term Life Insurance: Since it has no cash value, it generally doesn’t count against Medicaid eligibility.

  • Whole Life Insurance: This policy builds cash value over time, and Medicaid may count that cash value as part of your assets.

Many states allow a limited amount of life insurance cash value, typically under $1,500, before it impacts your benefits. Anything over that may need to be spent down or transferred before qualifying.

What You Need to Know:

  • Owning life insurance doesn’t automatically disqualify you.

  • Term policies are the safest option for Medicaid recipients.

  • Whole life policies with cash value must be disclosed.

  • Some people choose burial or final expense insurance, which may be exempt up to a certain limit.

Why It Still Makes Sense to Get Covered

Even if you’re on Medicaid, life insurance can protect your family from financial hardship when you pass away. Without coverage, your loved ones could face:

  • Out-of-pocket funeral and burial costs

  • Probate delays

  • Unplanned debt obligations

With the right policy in place, you can leave a legacy instead of a burden.

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