I have been paying the premiums the last few years. My mother has Alzheimer's and she's going downhill really fast. She needs more help than my sister and brother and I can provide and my father has Congestive heart failure and just survived colon cancer. He can't take care of himself much less her. They do not have the income to pay for assisted living. My mother mortgaged the house when she first started declining and we also had to file bankruptcy 2 years ago but managed to keep the house. I have been supplementing their income for the last few years. Should I just stop paying the premiums and let the policies lapse?
Who is the owner of the life insurance policy? For example, If your Dad is the owner and you are not looking for medicaid for him, then the issue is moot . . . until death benefits are paid out, to the beneficiary. One phone call and signature from the owner will change the beneficiary!
What type of insurance is it? If it is a term policy, there is no cash value, hence no asset. (See previous comment about beneficiary changes).
The owner of the insurance can also be changed easily. UNLESS this becomes a medicaid issue for the owner.
There is some info on the web about converting life insurance into long term care insurance that may be of interest to you.
I'm assuming when you say "we" it was your parents who filed bankruptcy 2 years ago, but managed to keep the house.
To answer your question more simply. Yes, life insurance policies are considered assets that Medicaid can use for recovery of care expenses after your father passed. If you are wanting to apply for Medicaid for your mom or both of your parents, I wouldn't just let the policies lapse. Get some guidance first.