(a) General. In determining the resources of an individual (and spouse, if any), life insurance owned by the individual (and spouse, if any) will be considered to the extent of its cash surrender value. If, however, the total face value of all life insurance policies on any person does not exceed $1,500, no part of the cash surrender value of such life insurance will be taken into account in determining the resources of the individual (and spouse, if any). In determining the face value of life insurance on the individual (and spouse, if any), term insurance and burial insurance will not be taken into account.
(b) Definitions—(1) Life insurance. Life insurance is a contract under which the insurer agrees to pay a specified amount upon the death of the insured.
(2) Insurer. The insurer is the company or association which contracts with the owner of the insurance.
(3) Insured. The insured is the person upon whose life insurance is effected.
(4) Owner. The owner is the person who has the right to change the policy. This is normally the person who pays the premiums.
(5) Term insurance. Term insurance is a form of life insurance having no cash surrender value and generally furnishing insurance protection for only a specified or limited period of time.
(6) Face value. Face value is the basic death benefit of the policy exclusive of dividend additions or additional amounts payable because of accidental death or under other special provisions.
(7) Cash surrender value. Cash surrender value is the amount which the insurer will pay (usually to the owner) upon cancellation of the policy before death of the insured or before maturity of the policy.
(8) Burial insurance. Burial insurance is insurance whose terms specifically provide that the proceeds can be used only to pay the burial expenses of the insured.