A participant is allowed an exemption of $1,500 on the cash surrender value of burial contracts, life insurance, designated burial funds, or a combination of these.
NOTE: If married, the exemption applies to each individual.
Always apply the CSV exemption in this order:
- Irrevocable pre-need burial contracts or irrevocable Personal Funeral Trust accounts
- Life insurance cash surrender value
- Revocable pre-need burial contracts or revocable Personal Funeral Trust accounts
- Designated burial funds
The CSV of a revocable pre-need burial contract is the refundable portion of the amount paid into the contract to date.
The CSV of an irrevocable pre-need burial contract must be listed as the full value of the contract or the amount paid in thus far. CSV of an irrevocable pre-need burial contract is an excluded resource. The value of the contract is listed as the CSV so that the policy can be used in the CSV exemption determination.
Review the policy regarding pre-need burial contracts for a more detailed explanation. Pre-need burial contracts are discussed in the following December 1973 Eligibility Requirements manual sections:
- 1030.020.10.05 Agreements Prior to October 13, 1965
- 1030.020.10.10 Agreements Between October 13, 1965 and August 27, 2009
- 1030.020.10.15 Agreements on or After August 28, 2009
- 1030.020.10.20 Assigning Life Insurance to Fund Pre-need Burial Contracts
- 1030.020.10.25 Irrevocable Pre-need Burial Contracts
If the amount paid into an irrevocable contract or a contract funded by the assignment of life insurance exceeds the CSV exemption, do not consider the additional amount of the contract an available resource. Furthermore, no CSV exemption remains to be counted toward other contracts or policies.
EXAMPLE: The participant owns three (3) life insurance policies with face values of $1000 each. The CSV of each policy is $800. She purchases a $2000 irrevocable pre-need burial contract and irrevocably assigns two (2) of the insurance policies to fund the contract. Because the irrevocable pre-need burial contract exceeds $1500, consider all the CSV from the remaining unassigned life insurance policy ($800) as an available resource.
In couple cases, apply the CSV exemption to each individual’s contracts or policies separately.
EXAMPLE: A participant has an insurance policy with CSV of $2700 and his/her spouse has an insurance policy with CSV of $1900. The $1500 CSV exemption is applied to each spouse’s policy. Enter the total CSV of each policy into the electronic case record. The eligibility system will deduct the $1500 CSV exemption from each individual’s policy. The participant will have $1500 CSV exempted and $1200 CSV as a countable resource. The participant’s spouse will have $1500 CSV exempted and $400 CSV as a countable resource.