Often times life insurance is considered an assets. Term insurance is not generally referred to as an asset as it covers a temporary need for death benefit protection.
Permanent life insurance like whole life insurance or universal life insurance is generally considered an asset as it has a cash value that you have access to any time you want.
If you are applying for Medicaid, life insurance is not considered an asset unless it has cash value, and then only the cash value is considered as the asset. In a financial portfolio, likewise, the cash value of a permanent policy is the asset. On the other hand, the life insurance death benefit left to heirs may be considered part of the estate.
That is an excellent question! In most financial circles, life insurance would not be counted as a tangible asset. Term life especially has no value unless you pass; Whole life has no big payout until then either. The cash value in the policy is where the confusion starts. Most States have a limit for the amount of cash that you can have when applying for medical assistance, and if you have a sizable amount scattered between one or more policies, this might be considered an asset by the State. You would need to talk to a Medicaid expert in your area to determine how much, if any the Government will count. Speaking more loosely, yes it is an asset, because it protects your loved ones from hardship when you pass. That is a big plus in my book! Thanks for asking!
Co-Founder, TermInsuranceBrokers.com, Goldenzweig Financial Group, Las Vegas, Nevada
This is a question best answered by a CPA if you're asking in regards to tax purposes. Generally speaking, it's not a liquid asset. Life insurance is a contract that says that if the insured dies during the life of the policy, the insurer will pay the beneficiary the stated death benefit of the policy.
If you have cash value that has built inside the policy, you can borrow against it. Please note, borrowing from your cash value is a loan and is expected to be paid back.
You can also elect to cash out the policy by terminating it and taking the cash value (less any surrender charges, loans, or interest left on the policy).
Before you terminate coverage to take the cash value, you may want to consult with your agent to make sure it's the best move for you. There may be other things to consider that you're not aware of/thinking about (e.g. protecting your insurability, what can happen if you needed/wanted coverage again, etc.).
I hope the information is helpful - please feel free to contact me for help and if you have any questions. Thanks very much.
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Permanent life insurance like whole life insurance or universal life insurance is generally considered an asset as it has a cash value that you have access to any time you want.
If you have cash value that has built inside the policy, you can borrow against it. Please note, borrowing from your cash value is a loan and is expected to be paid back.
You can also elect to cash out the policy by terminating it and taking the cash value (less any surrender charges, loans, or interest left on the policy).
Before you terminate coverage to take the cash value, you may want to consult with your agent to make sure it's the best move for you. There may be other things to consider that you're not aware of/thinking about (e.g. protecting your insurability, what can happen if you needed/wanted coverage again, etc.).
I hope the information is helpful - please feel free to contact me for help and if you have any questions. Thanks very much.