Many life insurance policies accumulate a cash value over time, commonly called cash surrender value (CSV). Policy owners can access the CSV by taking a loan out against the policy or terminating the policy to collect the CSV funds.
The CSV of a life insurance policy, minus any loans against the policy, is a countable resource.
Each individual is allowed a total CSV exemption of $1,500 on his/her pre-need burial contract, life insurance policy, and/or designated burial fund. Please review MHABD Manual section 1030.020.20 Cash Surrender Value (CSV) Exemption for more information regarding the CSV Exemption.
NOTE: If married, the CSV Exemption is allowed for each individual.
The CSV of a life insurance policy belongs to the owner of the policy unless they provide verification from the life insurance company that proves otherwise (reference 20 CSR 400 Chapter 1 Life Insurance and Annuity Standards).
If ownership of the policy has changed, determine if an improper transfer of assets has occurred. Additional information regarding the transfer of assets policy is located in MHABD manual section 1040.000.00 Transfers of Property.
Discuss with the participant the possibility of CSV in lapsed life insurance policies they may have. Even though the policies themselves have lapsed, the CSV may remain.