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| *Loan,banking and credit>>>state insurance |
Why do you pay into Life Insurance and have to cash out early or the state will not help you with finances? |
Why do you pay into Life Insurance and have to cash out early or the state will not help you with finances? The state will not help you because they want to make sure that you are really broke and have no money to use. Sometimes, you might have to sell your home to qualify for government aid. This is even true if you wish to get medicaid or medicare. Since your life insurance has savings in it, the state recognize that you are not broke and have money to use still. So, if you want the state to help you out, you will surrender your life policy and use up your cash value or give it to someone. If you still want life insurance, you can buy term instead because it has no cash value in it. Source(s): 231 If you have, permament life Insurance, you have a "cash Value". That is money held at the insurance company, which is receiving interest, or is invested in mutual funds. Since you can borrow against or withdraw against your cash value, the goverment sees it as part of your liquid net assets or available cash. It sucks, but the government is brutal when looking at your overall wealth. Just so that you are aware, there is another option other than surrending your policy back to the issuing insurance company. As the previous answer stated, the state views the face value of a life insurance policy as an asset. And like other assets, life insurance policies can be sold on a secondary market for far more than a cash surrender value. This is known as a life settlement. Many senior citizens are turning to this as a way to fund medical care, nursing home costs and hospice costs. Some do it just because they want to spend the money on their terms instead of leaving it to their beneficiaries. Many reasons for doing it... In any event, if you have further questions about this topic, feel free to email me. Life Insurance is property that is looked at as part of the assets you have unless the policy is set up differently, ie. the owner of the policy. Depending on the state you live in you could 1035 the cash value into an annuity which may be "not touchable" to the government. |
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