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Life Insurance, Funeral Homes, and Medicaid


 Life Insurance, Funeral Homes, and Medicaid

BY Jodi Clock, Author, "NAVIGATING THE ELDER CARE JOURNEY…WITHOUT GOING BROKE! , President Clock Timeless Pets, Business Partner Clock Funeral Homes Continue the conversation with Jodi at 

             This month, the “411” on life insurance, funeral homes, and qualifying for Medicaid assistance for long-term care.

I can’t share with you how may times our funeral home receives a phone call from a life insurance agent or financial planner asking if we will allow their client or family member to name our funeral home as the primary beneficiary of a life insurance contract. What even perplexes me more, is that the answer to the question above, is clearly discussed when an individual participates classes prior to taking their life insurance exam, whether a person is taking a full life or limited life exam, this is directly addressed.

Before the answer is addressed, it’s important to understand that there are two very different types of life insurance policies.

The first type of life insurance policy is the kind that this question is referring too. One that is written by a life insurance agent. An example of this would be an agent who represents insurance products from companies like Farmers, Prudential, USAA, State Farm, or Metropolitan. These companies offer consumers products like term life, whole life, universal life, annuities, long term care, etc.. Professionals who work with these types of companies have what is referred to as a “full life license” as they can sell an array of products that typically don’t have caps on the dollar amount purchased.

The second type of insurance policy is one that is sold by an individual who works at or is affiliated with selling what funeral homes refer too as pre-paid funeral plans. In Michigan, as well as many other states, this type of license is restricted to writing contracts of this nature only and in some cases have very limited dollar amount. The individuals/agents who write this type of contract/policy hold a “limited” life insurance license. Nationally, there are a handful of companies who sell this specific type of product as they are limited in scope, meaning there is usually a high average age, small commission and they have low dollar amounts in comparison to the traditional insurance mentions previously. Some of the most well-known pre-need insurance companies are Forethought, Homesteaders, NGL American, and Assurant.

To my point, the answer is “no,” funeral homes can not be designated as a beneficiary to a traditional type of insurance policy (translation -- a non-funeral related insurance policy). In the eyes of the law, this is a direct conflict of interest.

If the intent of the insurance policy is to pay for one’s funeral, there are some very simple legal solutions to accomplish paying for a funeral with a life insurance policy. 

One of the most common methods is to have the beneficiary of the insurance policy, after the death has occurred, sign an insurance assignment for the amount of the funeral only and request the remaining amount be sent them. Most funeral homes have a generic version of this form. Many of the insurance companies will accept this along with a certified death certificate. If any additional forms are needed, the insurance company will see to it that either the beneficiary or the funeral home, and/or both, receive the proper forms. 

Another method, which is a bit more labor intensive is to contact the insurance company directly after the policy as been issued and ask them if they have an “Irrevocable Trust” form. 

The purpose of an irrevocable trust is to hold the funds in an entity that can not be cashed in for any other purpose accept the insured’s funeral. These types of forms are only generated if an insurance policy has some form of cash value and or pays dividends. What this does is eliminate is the ability for the insured to take out a policy loan against the cash value. By assigning any form of cash value to the irrevocable trust and then taking the insurance company’s irrevocable trust form, along with the enforce policy to your funeral home of choice, then asking them to accept the funds placed in the irrevocable trust to be assigned to a funeral that will be delivered in the future, the insurance plan is considered exempt as an asset for Medicaid.

Below are the steps that have to happen for an Irrevocable Trust.

1. Traditional insurance policy must be issued and have some form of cash value.

2. Policy owner must contact the writing insurance company and ask them for their irrevocable trust form and any funeral home assignment forms they may have.

3. Policy owner must go to their funeral home of choice and ask the funeral home if they will accept the cash value as proceeds for their future funeral and will they “guarantee” merchandise or services for that amount. If the monies fall short of the funeral costs necessary the dollar amount can be placed towards the overall amount.

4. The funeral home must generate a guaranteed funeral goods and service statement and also sign an insurance assignment form. This means upon death they will accept the money from the insurance company AND the insurance company will send the funeral home their assigned portion after receipt of a certified death corticated and funeral bill.

The controversy with the above method is that some rather well known and large insurance companies have irrevocable trusts available, but won’t them available to their policyholders. This becomes problematic when a policyholder needs to qualify for financial aid for long term care (Medicaid) prior to death. If that policy can not be made irrevocable this places the entire policy in jeopardy, and potentially the ability to qualify for assistance.

If a policy holder is applying for Medicaid, one frequently used solution is to take out a policy loan against the cash value and immediately apply the cash value towards the purchase of a pre-paid funeral at a funeral home. This is much better than just surrendering the insurance policy over for the cash value. By doing this, the cash value is eliminated from the original life insurance policy; the cash value is placed in a specially designed funeral specific insurance policy that can be made irrevocable, therefore providing the policy owner with the best of both worlds. A life insurance that remains intact until death, a preplanned and pre-funded funeral, and the traditional insurance policy’s beneficiary will receive the balance left from the face amount of the insurance policy, minus the loan and any interest to cover the loan.

It looks like this.

$25,000 Face Value from ABC Insurance Company

Minus $10,000 Policy Loan (Zeroed out cash value, used to purchase a pre-paid Funeral insurance policy)

Equals $15,000 Balance at time of death

Minus $10,000 Loan amount ABC insurance company recovers from outstanding loan

Minus $300 interest (Whatever the interest rate is)

Equals $4,700.00 Back to beneficiary and funeral is paid in full.

So why all the fuss? There is disconnect in the law around this topic. There are laws that insurance companies follow. Laws that the funeral homes adhere too, caseworker guidelines/ manuals, and finally Medicaid qualification guidelines/ manuals, none of which are congruent in vernacular. This leaves the door wide open for subjective interpretation, as well as inconsistency between funeral homes and insurance companies.

 What’s the end result? Confusion! Confusion between all individuals or parties involved, who simply want to do the right thing and provide a means to an end.

So please keep in mind, many good people who are trying to do the right thing, can and do receive misinformation, which can and often does end up being fixable. However, what may seem relatively simple may be a very difficult task.

What are your thoughts? I'd love for you to continue this dialogue with me! Please share your thoughts at, Facebook, or my blog.

Visit Clock Funeral Home to learn more about what a Lifestory Funeral is, or their sister company Clock Timeless Pets or to purchase Navigating the Elder Care Journey…Without Going Broke! by Jodi Clock, go to

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How to Have a Clean Smelling Cat House


Perhaps you’ve heard someone make a comment about a house they’ve recently visited along the lines of: “I could tell they had cats the second I walked in because of the smell.” We all love our pets dearly, but we also want to make sure nobody ever cringes in olfactory disgust upon entering our homes. Oh, the humiliation.

Luckily, there are many things we can all do to keep our houses smelling clean and pet-free, even when we own cats, and we’re going to tell you how with these 11 helpful tips:

  1. Kitty litter maintenance is a simple daily step you can take in the fight against litter box smells. Keep a scooper near the litter box, and make scooping your cat(s) daily offerings a chore you do at the same time every day. If you can train yourself to do this daily by pairing it up with something else you do every day, you will do it consistently, and your house will smell better for it.
  2. Splurge on an effective kitty litter deodorizer additive. I recommend sprinkling Smelleze® Cat Litter Odor Control Deodorizer Additive on the kitty litter when it gets smelly. If you can also do this when you change the litter, it is better, because it will prevent the kitty odors. This is a natural substance that won’t harm animals, and it has amazing cleaning powers. It can freshen up a litter box by absorbing bad odors in no time.
  3. Use a litter box with a lid to hold in the smell. This also holds in the litter your cat may scatter around the room otherwise while digging, keeping your home cleaner.
  4. Change the filter in the lid once a month, because it not only helps to contain the stench, it keeps the dust from the clay litter from escaping, improving your indoor air quality.
  5. Use the plastic litter box liners sold to fit litter boxes, or improvise with trash bags if that’s more affordable for you. Just make sure to create a plastic barrier between the litter box and the animal waste so bad smells won’t attach to the permanent structure.
  6. Be proactive about removing cat-related odors. I suggest placing Smelleze® Reusable Pet Smell Eliminator Pouches in each area your cat frequents. This natural deodorizing product will constantly attract, absorb, and remove unpleasant feline smells 24/7. That will prevent odor build-up and keep your home from reeking. This deodorizer is also reusable and can be used for many years to save you money while helping the environment.
  7. Keep a small dustpan and hand sweeper nearby to clean up litter and pieces of waste dragged out of the litter box on kitty paws. If the cleaning tools are conveniently located, you will stay on top of this maintenance, and less litter will be tracked around your house.
  8. Change your kitty litter often, with once a week being the typical time frame for one or two cats, and twice a week for three or more. They’re being good kitties and going where they’re supposed to, so you want to encourage this great behavior by giving them a sanitary place to do so. As mentioned above, also consider sprinkling Smelleze® Eco Cat Litter Odor Control Deodorizer Additive at the bottom before adding the litter for extra odor protection.
  9. Make friends with the vacuum and broom. The same thing that makes our little feline friends adorable, fluffy and soft to the touch also makes a bit of a hairy mess in our homes if we don’t stay on top of it. Set aside a certain day every week for hair removal to sweep hard surfaces and vacuum carpets. For extra effectiveness, sprinkle some Smelleze® Natural Carpet Smell Deodorizer Powder on your carpets prior to vacuuming to get any lingering get kitty smell out and to freshen the carpet. This is a cat-safe and people-safe deodorizer.
  10. Place blankets or towels in favorite lounging areas. Cats tend to find a favorite sunny window or chair to sleep in and spend hours there every day making us feel jealous of their ability to sleep so well. By keeping blankets or towels over those areas, you are creating easily cleaned, removable liners to gather stray fur. And rather than trying to clean furniture upholstery, you’re protecting it.
  11. Brush your cat regularly. If your cat will tolerate this—and many love it—removing extra hair before it is shed will keep your house cleaner and reduce hair cleaning maintenance work for you later.

With a little forethought, planning and good maintenance habits, it’s really very easy to keep a house with cats smelling fresh and clean. If you’re noticing a little kitty odor in your home, try some of the tips above to clear the air.

Samantha Wright is a professional blogger that provides advice for home remodeling, home repairs as well as carpet and tile cleaning in Omaha. She writes for Simply Steaming, the top carpet cleaning company in Omaha NE.

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