Frequently Asked Questions

Irrevocable Funeral Trust

What is an Irrevocable Funeral Trust?

An Irrevocable Funeral Trust is a trust established to help people qualify for Medicaid.  It can hold a paid up life insurance policy that is used to pay the funeral expenses of the insured when they die. The primary benefit of assigning a paid-up policy to the trust is that in most states Medicaid will count the asset as “exempt” in the application process.  By making an irrevocable assignment, the owner cannot later change, reverse or dissolve the agreement.

Do I have to pay to establish the trust?

No.  Unity Financial has already established the trust.  There are no expenses associated with the trust.

Why assign an insurance policy to an Irrevocable Funeral Trust?

By irrevocably assigning a paid-up insurance policy to an Irrevocable Funeral Trust, you can permanently set aside funds that will be used to pay for your funeral and final expenses.  This can partially ease the burden on your family at the time of your death.  Additionally, the irrevocable assignment can help you qualify for Medicaid without exhausting all of your resources.

How quick is the claims process for policies assigned to an Irrevocable Funeral Trust?

Unity Financial Life Insurance Company typically pays claims within 24-48 hours of receiving full documentation.  In most cases, the funeral director at your funeral home will be happy to file the claim for you, as they are accustomed to this process.  Unity Financial can either pay the funeral home directly or reimburse a family member directly for out of pocket expenses.

How long is the claims process with traditional life insurance policies?

It varies – some companies may pay within a few days, but it can take as long as 60 days, sometimes longer, for some companies to pay out benefits after receiving the required documentation. If you have a policy with another company, we suggest you contact that company directly.

Pre-need/Burial Insurance Questions

What is Pre-need Insurance?

Pre-need insurance, sometimes referred to as burial insurance or funeral insurance, is a type of permanent life insurance that is used to pay for the costs of a funeral service or cremation.  Pre-need insurance differs from traditional life insurance in that the buyer of the insurance is simultaneously working with a licensed funeral director who is helping to plan a specific funeral or cremation plan.  The presence of a funeral goods and services contract is what makes the product pre-need insurance.

What are the benefits of pre-planning and pre-funding a funeral?

There are many benefits to pre-planning and pre-funding your funeral:

  • You can choose exactly what you want. With the aid of a licensed funeral director, you can select a traditional funeral or a cremation, your choice of music, pallbearers, casket, flowers or any other detail you want for your service.
  • Making those choices relieves your loved ones of making guesses about what you wanted.
  • With the details of your funeral service written down, your family and friends will have more time to think about eulogies and personal touches at the ceremony.
  • By pre-funding your service, your family will not worry about paying for the service.
  • Many funeral directors will guarantee the price of funeral goods and services if you pre-arrange and pre-fund your service. We encourage you to speak with a licensed funeral director or pre-arrangement counselor about the choices that are available to you.

What is Burial Insurance?

“Burial Insurance” usually refers to any whole life insurance policy with a death benefit designated to pay for funeral related expenses.  Burial insurance and pre-need insurance are often used interchangeably.

Should I get a traditional burial or a cremation?

This is up to you. When determining your final disposition, you can work with a funeral director or other family members to figure out what is best for you. Many aspects of a traditional burial, like a viewing or a ceremony, are now commonly added to services that go with a cremation. It is not mandatory that a cremation occur immediately after a death. Many families have a traditional viewing and then complete a cremation after the ceremony.

What is the typical cost difference between a traditional burial and a cremation?

These costs differ from funeral home to funeral home, and many prices differ depending on the region of the country you live in.  Some national surveys indicate that traditional services average almost $10,000, while cremation with services average $7000.  Direct cremation with no services can be less than $3,000.


How much does Social Security pay as a death benefit?

The Social Security Administration makes a one-time payment of $255 when you die, if you have made enough contributions as a worker.  The benefit can only be paid to your spouse or child if they meet certain requirements.  Survivors need to apply for this benefit within two years of the date of death.

SPIA and Medicaid Questions

What is a SPIA?

SPIA stands for Single Premium Immediate Annuity.  When a consumer buys a SPIA, they make a one-time payment to an insurance company; the company then makes smaller payments back to the consumer over time.  For the annuity to qualify as “immediate”, the consumer must elect to accept the first payment within one year of paying the insurance company.  A SPIA can be a valuable planning tool for people who are planning on applying for Medicaid.

What is Medicaid?

Medicaid is the government program that provides long term care to anyone who needs medical care but has exhausted all of their personal resources.  Applicants must meet specific criteria to qualify.  Although the rules are administered at the state level, and may differ slightly from state to state, the general guidelines for qualification are both financial and non-financial.

Financial eligibility includes:

  • A limited income
  • Limited assets – typically about $2,000 total financial assets
  • Limited assets of spouse – generally less than $123,600

Non-financial requirements include:

  • Must be US citizen
  • Must be 65 or older, or blind, or disabled
  • Must be living in a Medicaid approved nursing home or similar facility

What is Medicaid Spend Down?

Medicaid Spend Down is a phrase used to describe the process of exhausting assets for the purpose of qualifying for Medicaid.  This strategy helps an individual reduce their income or assets to meet Medicaid eligibility requirements.  Medicaid Spend Down is different in every state.  Anyone who is trying to qualify for Medicaid should consult with a Medicaid Eligibility expert.

What assets does Medicaid consider exempt, and what assets does it consider “countable”?

Countable assets must be depleted before an applicant can receive Medicaid benefits.  Bank accounts, any property other than your primary residence, investments including IRAs, stocks, bonds and mutual funds are all countable.  Life insurance policies with Cash Value that are not irrevocably assigned must also be surrendered.

Exempt assets are those that the applicant is allowed to keep and still qualify for Medicaid.  Although rules differ by state, most states allow applicants to keep prepaid funeral or burial plans that are irrevocably assigned, one motor vehicle, and personal possessions.

Does Medicaid have the right to recover assets after you die?

Yes, Medicaid can assert this right if funds that were set aside for funeral expenses are not used for that purpose, and Medicaid has provided benefits for which they have not been compensated.