Permanent Life Insurance - Whole Life and Universal Life (UL)

Permanent life insurance is a type of life insurance that is in force for the entire life of the life insured. It does not end due to any other factor other than death.

Whole life and Universal Life insurance are permanent insurance policies that cover the entire life of the insured. In addition to a death benefit, a portion of each whole life insurance premium paid to the insurance company creates a cash reserve. UL policies direct a portion of a premium to an investment account and typically offer the most flexible premium and insurance options.

The cash reserve is a pool of money available to the policy owner. If the policy owner no longer wants the insurance, they can withdraw the cash surrender value (CSV) from the cash reserve. At that point, the insurance coverage is terminated. The policy owner can also use the cash reserve to take a policy loan for up to a certain percentage of the CSV.

Term to 100 (Term-100) Insurance is a permanent policy that offers only death benefits and does not include any other benefits. This article will focus on the other types of permanent insurance. Use the Term Life Insurance option to enter this type of policy.

Add a Whole Life or Universal Life Policy to your projections.

In the software, these are identical, except that UL policies allow for the CSV to be added to the Death Benefit and paid out upon the client’s death.


Open the Insurance Data Entry Page

Select Scenario Setup -> Insurance -> Insurance Policies.

Select Add Insurance Policy.


Enter the Insurance Policy Details.

Enter a Description and select Whole Life or Universal Life 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.

The Death Benefit and Annual Premium are not displayed under the Insurance Policies table because they typically change over time. To enter, view, or edit these values, click Edit under either column.

This brings up a pop-up table where you can enter the details or copy and paste from Excel.

UL Policies have a check box above this table to “Include cash surrender value in death benefit”. Checking this box will add the CSV to the Death Benefit and pay both out to the beneficiary upon the insured’s death.

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 page 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, click the trash can icon under Actions.


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, CSV, 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 insurance payout is included in Estate before Tax on the Planning page unless the beneficiary has been set to Other. For UL policies the CSV may also be added to the Death Benefit for the insurance payout.

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

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