Medi - Cal and FE Policies?

This was brought up earlier and I can honestly say I've never come across this before....and I don't think the answer I was given was right.

Client has medi-cal. According to my boss since they have medi-cal, ANY life insurance policy that generates income for them (like final expense insurance would) they would lose their health insurance via medi-cal

That means only term.

Is this correct?
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