Whole Life Insurance and Medicaid Planning

life insurance contract
Katie Camann
Katie Camann September 1, 2022

As Content Marketing Specialist, Katie drafts and edits content across multiple platforms, including blogs, Industry News, emails, videos, website pages, and more. She conducts research and gathers up-to-date information to keep our clients well-informed.


When exploring crisis planning options with clients, it’s crucial to understand how different types of assets are treated for Medicaid purposes. Some resources are considered countable and must be spent down, while others are exempt from Medicaid’s limitations. Some assets, however, are only exempt if their face value is below a state-specific limitation. Whole life insurance falls under this category. Let’s take a deeper look at this type of insurance policy and how to handle it in Medicaid planning.


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What is Whole Life Insurance?

A whole life insurance policy consists of a life insurance contract that stays with the owner through death. The contract is funded with a single premium and is guaranteed issue, which means the policyholder can receive coverage no matter their health status.

Our whole life Insurance product has a maximum issue age of 95. The premium amount can be determined by multiplying the desired face value by 0.99 for men and 0.985 for women. For example, the premium for a $1,500 policy would be $1,485 for men and $1,477.50 for women.


Is Whole Life Insurance Exempt from Medicaid?

For Medicaid purposes, a small whole life insurance policy with a face value below a state-specific limit—$1,500 in most states*—is considered an exempt asset. Therefore, if your client only has a small amount to spend down before they meet Medicaid’s asset limitation, they can fund a small policy to accelerate their eligibility for benefits. This product can also be used as a simple add-on tool for any spend-down plan.

Discover your state’s life insurance limit for Medicaid.


If you are interested in learning more about whole life insurance and how to use it for your crisis planning cases, contact our team at The Krause Agency.


*Alabama, Florida, Louisiana, Mississippi, Montana, North Carolina, Rhode Island, and South Carolina have higher Whole Life Insurance policy limits for Medicaid purposes.