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I took out a term life insurance policy on my mother last year to help cover funeral expenses. I pay the premiums and I am the beneficiary.

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Since you are the beneficiary, I don't think so.
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The money will belong to you as the beneficiary. No, the NH could not take it if money was owed. You may want to look into getting Medicaid for help if her money is to run out. It will help to keep her from owing the NH.
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