KNOXVILLE, Tenn. (WATE) — Mary Ann Wright is one of several family members who care for Kate, her sister-in-law. At 79, Kate is a widow. She lives alone and was recently diagnosed with stage 3 cancer.
Kate asked we not use her last name.
Many in the family were concerned when last month Kate received notice that her TennCare Medicaid benefits were being dropped.
Last fall with the help of her family, Kate applied for nursing care a specific Medicaid program designed for people with low-incomes. However, she was denied because her resources exceeded $2,000.
Kate receives just over $700 a month from Social Security. She has a small whole life insurance policy through AARP, and she owns an older car. These few assets add up just over $4,400.
Life insurance protects your family financially. Whole life costs more than term life insurance but it includes an extras savings component.
Funds that are in the policy’s savings are invested and provide a “cash value” to the insured. That cash value is considered an asset.
As a result, the state suggested that she find health insurance through the Marketplace.
Kate’s younger brother Ray Wright started making calls trying to find out how he could help his sister. He said a supplemental policy was way beyond her financial means.
Through one of his calls, Ray discovered some little known information about whole life insurance policies. Either part of or all of the policy’s cash value could be placed into an irrevocable trust.
By completing an irrevocable trust Kate will be able to keep her federal benefits. Kate said her insurance policy was always intended to pay for future funeral expenses.
“I think what we are doing here today will help someone in the future who runs into this problem,” Ray Wright said.