Medicaid Policy
Medicaid Policy
No Previous Policy
An individual can fund a preneed funeral contract with a life insurance policy by:
purchasing a life insurance policy, and
assigning the proceeds or the ownership of the policy to a third party, usually, a funeral provider. The assignment can be revocable or irrevocable.
Determine who owns the policy. When someone other than the individual, such as a child or other individual, is named as the owner of the life insurance policy, decide if the ownership of the policy has been irrevocably assigned to the funeral provider. If it has not, the named owner has control over the policy and a possible transfer of assets has occurred. (594-4.8)
The individual must receive the preneed funeral contract in return for the assignment of proceeds or ownership. If not, the individual does not have a preneed funeral contract. A "funeral planning" form does not meet the criteria of a guaranteed preneed funeral contract if it does not contain the required elements of the model contract. Instead, the individual just owns a life insurance policy.
Utah law permits the owner of a life insurance policy to designate a funeral home as the beneficiary. However, the revocable or irrevocable designation of the funeral provider as the beneficiary, by itself, does not mean that the proceeds of the policy may be used only for burial expenses (594-4.7).