Can The State Take Life Insurance Money? 
If you have over $ 2000 of cash value in a life insurance policy and are going through a Medicaid spend down , it is possible that the State could have you spend down the life insurance cash value to $ 2000 . However , you are allowed to set aside a burial fund , and they can allow up to $ 25,000 in that , depending on where you live . So it may be possible to simply designate your life insurance as the burial fund , if you do have too much cash value in it to qualify for Medicaid , and do indeed wish to get on Medicaid . 