[GNC] Whole life insurance

[davidcousens49 at gmail.com]

Fred,

You will need a statement from the insurance company which details what
component of the premium  credited to your bank account when you pay it) is a
contribution/increase to the capital value of the asset which is the insurance
policy (debited to the account representing the policy and which is a fee to
cover their cost of operations/profits (debited to an expense account). 

They will have invested the funds you put into the policy and will pay bonuses
which add to the value of the policy (you debit the policy value by the amount
of the bonus and credit an income account by the same amount) Depending on the
tax rules for your jurisdication, that may or may not be taxable income.
Commonly this is taxed in the hands of the insurance company and not the
individual, but this may vary between jurisdictions. 

Most companies will send you periodic statements detailing the increase in value
of your policy, the premiums paid, and bonuses paid from which you can calculate
the required quantities.

The easiest way to handle this is to use an asset account for the policy with
individual subaccounts for the premiums paid, administrative charges and the
bonus payments.

When you pay the premiums you credit your bank account and debit the premium
subaccount,

when you receive a statement work out the difference between the increase in
poliycvalue (bfeore bonuses) and the premiums paid and credit the sub account
for administrative costs and debit an appropriate expense account for that
amount.

Similarly with te bonus amounts debit the account for bonuses and credit
theincome account ( taxable or not as appropriate).


david Cousens


On Sat, 2022-04-23 at 10:40 -0700, Fred Tydeman wrote:
> Suggestions on how to record for whole life insurance:
>   Premiums paid
>   Increase in cash value
>   Future death benefit
> 
>  I think some of that is like the Degas painting example in the Tutorial in
> that the increase in cash value is an Unrealized Gain.
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