1030.020.00 Life Insurance, Pre-need (also known as Pre-paid) Burial Contracts, and Designated Burial Funds

IM-154 October 7, 2019; IM-151 October 2, 2019

When a life insurance policy is assigned to fund an irrevocable pre-need burial contract, do NOT consider the cash surrender value (CSV) an available resource (Reference RSMo 208.010.4 and RSMo 436.450).

CSV of a life insurance policy is not a countable resource when the following conditions are met:

1. There is a valid irrevocable pre-need burial contract; AND
2. There is verification the contract was funded by the participant’s life insurance policy. This can be an agreement that:
   • transfers the ownership of the policy to the funeral home
   • names the funeral home as the beneficiary of the policy, or
   • assigns the policy as collateral to the funeral home

If the above criteria are met, exclude the CSV from consideration as an available resource as of the month the participant signs the documents to fund the pre-need burial contract with the life insurance policy.

If the above criteria are not met, consider the CSV of the life insurance policy as an available resource.  

Funds remaining from the life insurance policy that funded the irrevocable pre-need burial contract, that were not spent on the participant’s burial will be claimed by Estate Recovery, up to the amount expended for public assistance for the individual. It is the funeral home’s responsibility to notify the Cost Recovery Unit that there are remaining funds.

In the electronic case record, make separate entries for the life insurance policy and the pre-need burial contract.

• EXAMPLE: The participant has an irrevocable pre-need burial contract with a funeral home with a face value of $3000.  The pre-need contract is funded by a life insurance policy with the funeral home listed as the beneficiary. 
  • In the electronic case record, make the following entries:
    • Pre-need burial contract: CSV = $3000 (use the face value of the contract). Indicate that the contract is irrevocable and funded by life insurance
    • life insurance: CSV = $0
    • When the countable resources are reviewed, the eligibility system will show the $1500 CSV exemption was applied to the pre-need burial contract. The remaining $1500 of the irrevocable pre-need contract and the CSV of the life insurance policy are not countable resources.

For additional information regarding the CSV Exemption refer to December 1973 Eligibility Requirements Manual Section 1030.020.20 Cash Surrender Value (CSV) Exemption.