My husband passed away few years ago, I cashed out his life insurance money and put the money in bank. Should I report the money to FAFSA? If the money still leave with life insurance company, then I don’t need fill it, am I correct?
Thanks
I don’t think you are correct.
Beside each item on FAFSA, there is an ‘i’ in a circle and you click it to get more information. Do that and see if life insurance proceeds are excepted. Usually money takes on the characteristics of the new vehicle it is in. Money in a savings account becomes savings. Money from the sale of a home not used to buy a new home becomes savings. Retirement money pulled out of a retirement account becomes savings if not reinvested within a certain amount of time.
Life insurance death benefits received and still held must be reported as an asset. It is not reported as income.
If you have money you must report it on the FAFSA. Even if it is hidden under your mattress
I’m sorry for,your loss.
Your life insurance payout is not income…but money in your bank account must be reported as an asset.
I would contact the college(s) and ask about their process for professional judgement as this is a one time pay out. Some schools might be willing to do this given the circumstances.
Thanks!