Is life insurance considered an asset?

Life insurance is considered an asset in some cases, and can impact Medicaid eligibility, mortgage qualification, and even legal disputes such as divorce. The life insurance policies that are considered assets usually build cash value. Term life insurance is not typically considered an asset, while whole life insurance is.

Ready to compare quick life insurance quotes?

Your life insurance quotes are always free.

 Secured with SHA-256 Encryption

Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

Full Bio →

Written by

Benjamin Carr was a licensed insurance agent in Georgia and has two years' experience in life, health, property and casualty coverage. He has worked with State Farm and other risk management firms. He is also a strategic writer and editor with a background in branding, marketing, and quality assurance. He has been in military newsrooms — literally on the frontline of journalism.

Full Bio →

Reviewed by Benji Carr
Former Licensed Life Insurance Agent

UPDATED: Jul 19, 2021

Advertiser Disclosure

It’s all about you. We want to help you make the right life insurance coverage choices.

Advertiser Disclosure: We strive to help you make confident life insurance decisions. Comparison shopping should be easy. We are not affiliated with any one life insurance company and cannot guarantee quotes from any single company.

Our life insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different life insurance companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance-related. We update our site regularly, and all content is reviewed by life insurance experts.

Quick Facts

  • Life insurance policies can sometimes be considered tangible and liquid assets
  • Permanent life insurance policies are more commonly counted as assets
  • The type of life insurance policy and amount of cash value determines whether or not your life insurance is an asset

Is life insurance considered an asset? Whether you’re looking to acquire a mortgage or are facing an impending divorce, you might be looking to find out if your term or permanent life insurance policy is considered an asset.

Assets come in different forms and your life insurance policy may or may not be considered an asset, depending on the type. We’ll cover the types of life insurance and when and why life insurance is an asset.

Is life insurance considered an asset? Learn that and more in just a few minutes. While you’re here, don’t forget to use our free quote tool to see if you can save on top life insurance policies.

Is life insurance an asset?

Life insurance comes in many forms, and it will be classified as an asset in different ways depending on the policy type. There are a few cases when you’ll need to identify your assets such as mortgages, divorce, or Medicaid.

What counts as an asset? This will depend on the situation and the type of asset. In this case, there are tangible and intangible assets. Tangible assets are physical in nature and have a finite value.

Intangible assets are not physical and have no set value. For example, a car is a tangible asset (physical, finite) whereas trademarks (not physical) are considered intangible.

Other important classifications include liquid assets versus illiquid assets. Liquid assets can be quickly converted to cash whereas illiquid assets cannot, or at least not without volatility and potential loss.

In this case, cash and bonds are very liquid assets while stocks and vehicles are illiquid assets, due to volatility. Many times, organizations only accept tangible assets whether liquid or not.

Is life insurance a liquid asset? This is where your policy type becomes more important.

Which life insurance policies are assets?

Life insurance policies are only considered assets sometimes. Which types of life insurance policies are considered assets? In most cases, only those that can be converted to cash or build cash value are considered an asset.

Is term life insurance an asset? In most cases, term life insurance won’t be considered an asset since it doesn’t build cash value. Once the policyholder dies, the death benefit would then become an asset to the beneficiary.

There are some very rare circumstances in which a term life insurance policy could be considered an asset, but those aren’t common to the everyday person.

The main difference when comparing term vs. permanent life insurance is the cash value. Permanent life insurance options can be considered assets since they tend to build cash value like a savings account.

So is whole life insurance an asset? Whole life insurance and universal life insurance are both considered permanent life insurance options that build cash value, so each would be considered an asset.

When is life insurance considered an asset?

As mentioned above, there are some common instances when you might be looking to determine whether or not your life insurance policy can be considered an asset.

Is life insurance considered an asset for Medicaid? Medicaid has eligibility restrictions regarding assets. In this case, term life insurance is not considered an asset while permanent life insurance policies are.

Ready to compare quick life insurance quotes?

Your life insurance quotes are always free.

 Secured with SHA-256 Encryption

In Florida, Medicaid only considers cash value above $2,500 to be an asset. That threshold seems to be consistent from state to state.

Is life insurance considered an asset in a divorce? From a legal perspective, term life insurance and the associated death benefit are typically not considered an asset during a divorce.

Like Medicaid eligibility, permanent life insurance faces different standards since the cash value is easily accessible. Permanent life insurance policies can be considered marital assets.

Regardless of the type of life insurance policy you have, there are a few important steps to note when handling life insurance after divorce if you want to protect your assets.

Is life insurance considered an asset for a mortgage? Your mortgage underwriter might examine your assets to determine your eligibility for a long-term loan.

You can expect the same exceptions with mortgages when determining whether or not your life insurance policy is considered an asset. 

Your life insurance quotes are always free.

 Secured with SHA-256 Encryption

Life Insurance as an Asset: The Bottom Line

There are a few circumstances when you’ll need to have a list of your assets and their worth. In most cases, permanent life insurance policies that build cash value are considered assets while term life insurance policies are not.

Is life insurance considered an asset? Your life insurance policy could be classified as an asset depending on the type. Enter your ZIP code to get free life insurance quotes today.

Ready to compare quick life insurance quotes?

Your life insurance quotes are always free.

 Secured with SHA-256 Encryption

QuickQuote is a BBB Accredited Business. BBB