FREQUENTLY ASKED QUESTIONS ABOUT THE

Funeral Trust Program

Can everyone be covered?

Anyone up to age 99 can be covered with the plan regardless of health.

Is there any underwriting?

The plan is field underwritten, which means that agents ask the health questions.

How long does it take to get a policy issued?

Once the application and other documentation are received at the home office of

FDLIC, a policy is generally issued in 5 to 7 days.

What is the maximum amount a policy can be written for?

The maximum policy amount is $30,000, but varies by state law.

What is the minimum amount a policy can be written for?

The minimum policy amount accepted is $500.

Do I have to deliver a policy?

No, FDLIC sends a Certificate of Coverage to the clients.

Can a client get a copy of the policy if they so chose?

Yes, clients can request a copy of their policy at anytime. There are instructions on how

to request a copy of the policy on the Certificate of Coverage that is sent to the clients.

Questions on the Trust Document

What is the Decisions Made Early* Irrevocable Final Expense Trust?

The Decisions Made Early Trust is a trust agreement between the Settlor and the

Trustee of the Decisions Made Early Trust which is established to make funds

available at Settlor's death for the purpose of paying part or all of the Final Expenses as

defined in the Irrevocable Final Expense Trust Agreement.

What does Irrevocable mean?

Irrevocable means it is impossible to change. Thus, terms of the agreement may not be

changed, amended or canceled. The trust may not be terminated except through

distributions permitted by the trust agreement.

Who is Pat Baxter?

Pat Baxter is the trustee of the Decisions Made Early Irrevocable Final Expense Trust

Agreement. She is also Executive Vice President and Chief Operations Officer of

Funeral Directors Life Insurance Company.

What can Pat Baxter do with the property my client transfers to her as trustee?

Under the terms of the Decisions Made Early Irrevocable Final Expense Trust, the

trustee shall have no duty to and is expressly prohibited from changing, liquidating, or

diversifying any trust asset contributed by Settlor. Thus, she cannot surrender a policy

for its cash value. She can only make distributions according to the trust indenture

which says that distributions shall be made to a service/product provider(s) in payment

of Settlor's Final Expenses, and provided any funds remain, distribute to any Residual

Beneficiary named.

Can the trustee change the beneficiary of the trust? Can she change the owner or

beneficiary of the annuity or life insurance policy?

No.

What happens if something happens to Pat Baxter?

The Decisions Made Early Master Trust Agreement has an Advisory Committee

comprised of three members. This Advisory Committee has the right to remove any

Trustee by a written instrument delivered to the Trustee and upon a Trustee's death,

disability, resignation or removal, the Advisory Committee shall have the power to

appoint a successor Trustee.

It is my understanding that Medicaid allows for a burial fund (of $11500) or a

prepaid funeral or funeral trust. Does a life insurance policy purchased in a lump

sum payment and transferred to the Decisions Made Early Irrevocable Final

Expense Trust, qualify for exclusion for Medicaid eligibility? If so, is there any limit

on the amount that may be transferred and still excluded?

While Congress and the federal Health Care Financing Administration set out the main

rules under which Medicaid operates, each state runs its own program and has its own

Medicaid laws. As a result, the rules are somewhat different in every state, although the

framework is the same throughout the countrv. Medicaid laws and court cases

interpreting those laws are constantly evolving. The following describes those basic

rules, but check your state for the specific application where you live.

Almost all states allow for the irrevocable set-aside of funeral and burial funds in trust

or pre-need insurance. In most states the limits as to the amounts that qualify for

exclusion for Medicaid eligibility are "unspecified". In Indiana a court ruled that a

"valid irrevocable Indiana funeral trust" is exempt regardless of its value (Id S

2615.20.15).

Do these transfers qualify for exclusion, without penalty, regardless of any lookback

period or spend down provisions of Medicaid?

The irrevocable assignment of assets to the Decisions Made Early Irrevocable Final

Expense Trust is designed to qualify those assets for exclusion, without penalty,

regardlesso f any look-back period or spend down provisions of Medicaid but because

the rules are somewhat different in every state, check your state for the specific

application where you live.

If the residual beneficiary is a family member, is the amount paid to the residual

beneficiary subject to the look-back period or spend down provisions of Medicaid?

Because the rules are somewhat different in every state, check your state for the

specific application where you live, but the irrevocable assignment of assets to the

Decisions Made Early Irrevocable Final Expense Trust is designed to qualify those

assets for exclusion, without penalty, regardless of any look-back period or spend down

provisions of Medicaid, and regardless of whether the residual beneficiary is a family

member.

Can the residual beneficiary be the funeral home?

The servicing funeral home will automatically be paid first according to the trust

agreement. Therefore, FDLIC recommends that the residual beneficiary be a family

member of the insured.

Are you allowed to have more than one policy in the trust?

As long as you complete a new Trust Agreement and Assignment form for each policy,

you are allowed to have more than one FDLIC policy in the Decisions Made Earlyt'

Trust.

Can the money be taken out once it is put in?

Yes, during the 30 day free-look period only, then no money can be taken out of the

irrevocable trust.

Explain the Part A and Part B mentioned in Article 4 of the trust agreement.

While Congress and the Federal Health Care Financing Administration set out the main

rules under which Medicaid operates, each state runs its own program and has its own

Medicaid laws. As a result, the rules are somewhat different in every state, although the

framework is the same throughout the country. Medicaid laws, and court cases

interpreting those laws, are constantly evolving.

Because it is impossible to know how Medicaid laws will be interpreted in the state of

the Settlor's residence for purposes of Medicaid qualification, the Trustee shall divide

the Trust Estate into two separate shares, trusts A and B. Trust A shall be composed of

cash in an amount equal to the lesser of (1) the maximum amount that may be set aside

in the state of the Settlor's residence for funeral expenses and qualify as Exempt Assets

for purposes of Medicaid qualification, less the aggregate amount of assets designated

for such purposes not owned by this Trust or (2) the Settlor's funeral expenses paid or

payable by the Trustee in accordance with and as specifically authorized by Settlor's

expense directive attached to the Trust as Exhibit "A".

Trust "B" shall be the balance of the Trust Estate after the assets have been allocated to

Trust "A".

This provision in the trust allows the Settlor to take the maximum amount for funeral

expenses and qualify as Exempt assets for purposes of Medicaid qualification as

determined in the Settlor's state of residence.

Is a specific funeral home named anywhere in the application documents?

No specific funeral home is named in the application or the trust documents. The trust

dictates the payout procedures at the time of death. The funeral home that provides the

products and services at the time of death will receive proceeds from the trust as

payment.

Can these funds be attached by Medicaid or nursing home?

The Decisions Made Early Trust is designed to qualify those assets for exclusion,

without penalty, regardless of any look-back period or spend down provisions of

Medicaid and as such, assets excluded by Medicaid would not be attachable by

Medicaid or a nursing home.

Can the client cash in the policy at a later date?

The client can only cancel this policy during the 30 day free look period and receive

their money back. Because the client has assigned all rights of the policy they can no

longer cash it in, borrow against the cash value, or implement any other options. The

assignment was completed specifically for this reason making it "un-attachable" by

creditors or nursing homes.

How long does it take to get the benefits paid out at the time of death?

The funeral home providing the services will fax a copy of the itemized bill signed by

the family along with a copy of a certified death certificate to FDLIC. The benefits of

the Decisions Made Early Irrevocable Trust are then paid out to the funeral home that

performs the services and to the residual beneficiaries the next business day.

Who actually are the primary beneficiary and owner of the policy?

The primary beneficiary and owner should be the Decisions Made Early lrrevocable

Trustee in order to remove these assets from the estate.

Who can be named as a residual beneficiary?

The client can name anyone they choose as a residual beneficiary. However, FDLIC

recommends that the client names someone other than their spouse in order to avoid the

funds coming back to the estate and creating problems with creditors.

Can the residual beneficiary be changed at a later date?

No.

Why does the client assign their rights of the policy to the trust?

The client assigns their rights of the policy to the trust to get the money out of their

estate so that it will be protected from attachment by creditors, such as: nursing homes,

Medicaid, hospitals, lawyers, and estate tax.

Can a client get their money back?

The client does have a 30 day free look period and the time frame for this period begins

when they receive the letter and Certificate of Coverage from FDLIC.