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If you own a life insurance policy with a named beneficiary or beneficiaries and you are concerned about the current value of the policy (in other words the policy is a whole life policy with a cash surrender value verses a term policy that has no current value) you can always transfer ownership of the policy to your beneficiary.
Of course, no matter what you do as far as transferring ownership of the policy it would be subject to the Medicaid
5 year "look-back period" just like any other transfer or gift of any other asset. So, if you are concerned about Medicaid issues, the sooner you make the transfer, the better.
It isn't possible to determine what is "better" in any one person's situation in terms of how to treat a life insurance policy as everyone's situation is different, based upon a whole host of issues; family situations & circumstances, financial and investment issues; beneficiaries and their relationship to the insured and to each other; If there is significant value to be concerned about, then an analysis of the complete situation should be considered; you really shouldn't (or can't) make a decision based upon one asset verses another, without considering the entire picture, which is obviously beyond the scope of what we can do in this format.