It definitely can in many states. It's not the death benefit that's the problem, it's the cash value. It's counted the same as money in the bank.
If you just want enough insurance to cover funeral costs you can set up an irrevocable funeral insurance policy at a funeral home. Those are exempt from counting as an asset. Some funeral homes will take assignment of your existing policy if you ask them.
Or if you start a brand new policy you can make someone else (like an adult child who is not on SSI) as the owner from the begining.
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If you just want enough insurance to cover funeral costs you can set up an irrevocable funeral insurance policy at a funeral home. Those are exempt from counting as an asset. Some funeral homes will take assignment of your existing policy if you ask them.
Or if you start a brand new policy you can make someone else (like an adult child who is not on SSI) as the owner from the begining.