Term Life Insurance

Term life insurance is a type of insurance that provides a death benefit for a period of time, such as 10 or 20 years, or up to a certain age such as 65. The death benefit is paid to the beneficiary if the life insured dies during the term. If the life insured does not die within the term, the death benefit is not paid out.

In Snap you can easily add a term insurance policy to your clients' projections.

1

Open the Insurance Data Entry page.

Select  Scenario Setup -> Insurance -> Insurance Policies.

Select  Add Insurance Policy.

2

Enter the Insurance Policy Details.

Enter a Description and select Term as the policy Type.  You'll notice that you can select either the client or the spouse as the person who is Insured. 

Joint policies

For joint policies, choose the insured based on who is the first or last to die in your projections. If the projections for both spouses end in the same year, select either one as the insured. Note that the insurance premiums will be funded by the insured person in the projections. If you need to update the projections to change the final year for either spouse, you can do that as shown here: How to Change the End Date of Projections.

Under Coverage From Age, you can update the default starting age which is the age the individual reaches by the end of the first year of the plan. You can enter a new age, or select the gear icon to enter a specific year, month, and day that coverage starts. 

Under Coverage to Age, you can enter the age directly, or select a term length to update the age automatically. Also, if you prefer to use dates instead of ages for data entry, click the gear icon to open a date entry field. 

Term Length: The types of term insurance you can add automatically are Term-10, Term-20, Term-65, and Term-100. If you wish to add insurance that is already in place with a different term length, you can adjust the Coverage to Age field to match the remaining term of the policy. 

Term-100 Insurance (Term to 100) insurance is a type of permanent insurance. At the age of 100, the policy is considered paid up. The premiums cease at that point, but the coverage continues.

Policy renewals: To illustrate the renewal of a term policy, create a new term policy with a  Coverage from Age entry as the date of expiry of the first policy.

The last entries are for the  Death Benefit,  Annual Premiums, and Beneficiaries.

In Snap, the beneficiary is split into the Estate of the Client, Spouse, and Others.  If you have enabled Charitable Donations in your scenario, a charity may also be selected as the beneficiary.  Each of these parties can be assigned a percentage of the death benefit.  

You can record additional details about the policy such as renewal provisions or convertibility options in the  Notes section by selecting the pencil icon under Actions. These notes are only displayed on this data entry screen. Notes for your clients can be added to the Comments section of the Insurance section of the Report. 

To delete the policy, select the trash can icon under Actions. 

3

Insurance on the Planning page and in the Report

Once the policy has been entered, select  Planning Pages to return to the projections where the Death Benefit and Premiums will be displayed under the Insurance section.  

Impact on cash flow and estate

The annual insurance premium is subtracted from the insured client's cash flow to cover the cost of insurance.

The death benefit is included in Estate before Tax on the Planning page unless the beneficiary has been set to Other. If the projections of the insured end within the term of the insurance policy, the death benefit is paid to the beneficiary as specified in the Beneficiary section. If the projections of the insured end past the term of the insurance policy, there is no payout to the beneficiary.  Please click here for steps to change the end date of projections for a client.

The Insurance proceeds are shown in a separate line in each year's Estate Summary.

In the Report, select Insurance Policies to view the details and add comments if desired.