Is The Cash Surrender Value In Insurance Policies Counted For Social Security Disability?

Social Security Disability eligibility depends on three things.

The first thing that must be considered when determining eligibility for SSD is whether or not the disability claimant is insured for Social Security Disability benefits in the first place.

To be insured for SSD disability benefits, the disability claimant must have worked enough in the years prior to becoming disabled to be insured. An individual must have earned one quarter per year from the age of twenty-one until the year they became disabled to be fully insured and have worked twenty of the last forty possible work quarters, or five out of the past ten years, to be disability insured (special rules are in place for individuals who are under thirty-one years of age that require less work quarters to be disability insured).

Disability claimants must be both fully insured and disability insured to be eligible for Social Security Disability.

If the disability claimant is insured, the second thing that could affect disability eligibility is work activity. If a disability applicant is working over SGA, their disability claim will be denied prior to being sent (to disability determination services where cases are assigned to disability examiners) for a medical decision.

Finally, a disability claimant must be found medically disabled. Generally, if an individual is A) insured, B) is not working over the SGA monthly earnings amount, and C) is found to be medically disabled, they will be approved for Social Security Disability benefits.

Cash Surrender Value

Now, to the topic of this post: Resources, a.k.a. assets, have no importance in Social Security Disability entitlement (as opposed to SSI disability, where the limit for countable assets is 2,000 for an individual and 3,000 for a couple). Therefore, the cash surrender value of an insurance policy is not an issue.

In contrast, however, the cash surrender value of an insurance policy or policies is counted toward the resource limit of the Supplemental Security Income disability program.

Eligibility for SSI disability benefits may be affected by the cash surrender value of insurance policies. The SSI disability program has strict resource limits if the cash surrender value of an insurance policy is over the couple's or individual's resource limit. As such, the disability claimant or beneficiary could be denied benefits even if they have been medically approved for disability, or are currently receiving SSI disability benefits.

Keep in mind, cash value of insurance policies is not the only resource that could affect eligibility for SSI disability. Other resources that could count toward the limit are: vehicles, land or homes (other than the home the disability claimant lives in), stocks, bonds, 401K plans, workman's compensation settlements, jewelry, antiques, or just about any other thing that can be readily converted to cash.

About the Author: Tim Moore is a former Social Security Disability Examiner in North Carolina, has been interviewed by the NY Times and the LA Times on the disability system, and is an Accredited Disability Representative (ADR) in North Carolina. For assistance on a disability application or Appeal in NC, click here.

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