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- All life insurance policies are used to determine eligibility for SSI. Policies include cash value life insurance and term life insurance. Cash value life insurance builds a cash reserve that may be used during your retirement and thus provides a readily available source of cash. However, ordinary term policies providing just a death benefit are also used in determining eligibility for SSI.
- SSI may be reduced if your life insurance policy face amount (death benefit) exceeds $1,500. The Social Security Administration also does not include burial insurance so long as the insurance does not exceed $1,500 plus $1,500 for your spouse.
- SSI is paid in addition to other retirement income you receive from Social Security. This adds another layer of income to help you pay cope with ordinary expenses. In addition to a base amount you receive from the federal government, your state may also chip in.
- You cannot have a large amount of life insurance and qualify for SSI. If you do have a life insurance policy, you'll have to sell it or cash it in. Even if you are not required to pay any more premiums to the life insurance company for the policy, you won't qualify for SSI while you still have the life insurance policy in force. Your family might need more than the maximum $1,500 that you are allowed to keep, which puts you in a difficult position of choosing whether to keep your life insurance policy or give up your policy (or reduce the amount of death benefit) for an additional Social Security benefit.
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