What is the Effect of Social Security Payments on a Life Insurance Beneficiary?

UPDATED: Nov 14, 2011

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UPDATED: Nov 14, 2011Fact Checked

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Asked November 14, 2011

1 Answer


The effect of a life insurance inheritance on your Social Security depends on what type of Social Security payments you receive. If you are receiving SSI checks, then the inheritance will have an impact, but if you are receiving SSDI, then the payments are based on your working history, and the inheritance will not have any effect.

SSI payments are based on your financial value. When you receive an inheritance, that money is calculated as income, and could very well cause you to lose one or more months of payments. In general, if your calculated net worth is greater than $2000 you are not eligible to receive an SSI payment. This calculation is made each month, so the more you inherited, the longer the payments from SSI will be unavailable. On the other hand, SSI is not a large income, and the inheritance is more likely to improve your quality of life while it lasts.

SSDI is the type of Social Security payment you receive when you are verifiably disabled. SSDI payments are based on your working history, and are based on how much reported income you had in the past, not on how much you currently have in the bank. Because it is not concerned with your net worth, SSDI is not affected by receiving an inheritance or any other monetary windfall.

Medicare and Medicaid are not Social Security payments, but they are sometimes confused with SSI due to the fact that these programs are government sponsored. If you are covered under Medicaid, an inheritance has the potential to cause you to lose the assistance for a period of time. Food Stamps are also based on your financial worth, and any month you have more assets than the amount designated in your state, you will not be eligible to receive food stamps.

Answered November 14, 2011 by Anonymous

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