how does the face amount of life insurance affect ssi?

SSI, or supplemental security insurance, is often given to those with disabilities, and the elderly. It is not given freely, and is often income based. There is a limit to how much income you can have to qualify for SSI, and in some cases, life insurance policies can affect your income limit. Term life insurance and final expense life insurance are never counted against you, as they are used to care for final expenses once you pass.

The key to whether or not your life insurance policy will count against receiving SSI is whether or not there is a cash valuation to your policy. Term life insurance or final expense insurance does not have a cash value. Because there is nothing to cash out or borrow from, these types of insurances aren't counted against you when applying for SSI.

Whole and universal life insurance are known for having a cash value that the policy owner can borrow from, therefore, the cash value of the life insurance policy can and likely will be used against you when filing for SSI. This must be counted as savings or income if you receive any dividends from one of these types of life insurance policies.

The only way that you can avoid having a universal or whole life insurance policy not count against you when you are applying for SSI is to name someone else as the owner of policy. The named owner of the policy must have an insurable interest in your life. This could mean naming a grown child or grandchild, and in some cases, an employer as the policy owner. By naming someone else as the policy owner, this removes the cash value from your name so that it won't affect your SSI application. If you do decide to borrow from the policy for any reason, you will have to go through the named policy owner, and they will have to borrow from the policy in your name.