Universal Life Insurance: Entering Details In Quicken

Universal life insurance is a type of permanent life insurance that offers flexible premiums, adjustable death benefits, and a savings component. It is a popular choice for individuals and families seeking lifelong coverage and the opportunity to build cash value. When it comes to managing finances, many people turn to software like Quicken to stay organized. Tracking universal life insurance in Quicken can be beneficial for those who want a comprehensive view of their financial picture, including assets, liabilities, and insurance policies. In Quicken, users can set up an insurance account to track premium payments, dividends, and the cash value of their universal life insurance policy. This allows for a centralized view of their financial situation, making it easier to plan and make informed decisions.

Tracking universal life insurance in Quicken

Treat it as an Investment Account

One approach is to treat your whole life insurance policy as an investment account. This means recording your payments and tracking the cash value as it grows over time. You can set up a specific account in Quicken to monitor the cash value of your policy, making adjustments for premiums, expenses, insurance charges, dividends, and interest. This method may require some manual work, but it provides a detailed view of your policy's value within Quicken.

Track Premiums as Expenses

If you're primarily interested in tracking your premium payments, you can simply record them as expenses in Quicken. This approach treats life insurance as a necessary expense, similar to groceries or gasoline. Each time you make a premium payment, categorise it under "Financial:Life Insurance" or "Insurance:Life" to keep track of your spending in this area.

Consider the Nature of the Policy

The type of life insurance policy you have may influence how you choose to track it in Quicken. Whole life insurance policies, which have a cash surrender value, can be considered assets and should be tracked as their value changes. On the other hand, term life insurance policies typically have no value and may not need to be tracked in the same way. If your policy has a "current cash value," you can include it in Quicken, but be prepared to update it manually as the value changes.

Include in Net Worth Calculations

When considering life insurance in the context of your net worth, it's important to distinguish between the death benefit value and the cash value of the policy. The death benefit value is what your heirs will receive upon your death, so it may not be relevant to include in your personal net worth calculations. However, the cash value, which increments annually, can be included in your net worth calculations and tracked over time.

Utilise Comments and Account Details

You can use the comments and account details sections in Quicken to record specific information about your life insurance policy. This can be helpful for your beneficiaries to find the relevant information if needed. Include details such as the policy value, terms, and any other important particulars.

In summary, tracking universal life insurance in Quicken can be tailored to your specific policy and financial management needs. By considering the nature of your policy and the level of detail you require, you can choose to track premiums, cash value, or both. Utilise the tools within Quicken to create a comprehensive financial picture that includes your life insurance information.

Universal life insurance as an asset or liability

Universal life insurance is a type of permanent life insurance that provides flexible premiums, a cash savings component, and a death benefit. It allows policyholders to borrow against or cash in their savings portion, which grows tax-deferred over their lifetime.

Universal life insurance can be considered an asset as it enables policyholders to build cash value over time and provides access to this cash value. Policyholders can borrow against the cash value, use it as collateral for a loan, or withdraw funds. However, it is important to note that any outstanding loans or withdrawals at the time of the policyholder's death will reduce the death benefit paid to beneficiaries.

When considering whether to classify universal life insurance as an asset or liability, it is essential to understand the specific features of the policy and how it fits into your overall financial plan. While the cash value component can be a valuable asset, there are also potential liabilities associated with universal life insurance. These include the risk of large payment requirements if the cash value drops too low, the possibility of policy lapse if premiums are not sufficient, and the potential for taxable withdrawals.

In Quicken, there is no dedicated field for tracking life insurance policies. However, users can include life insurance as an asset by creating an Other Asset and Liability account. This allows them to track the cash value of their universal life insurance policy and any associated expenses. It is important to note that the cash value of the policy will need to be updated manually as it changes over time.

Recording premium payments

If you have a whole life insurance policy, which has a cash surrender value, you can treat it as an investment account. You can set up an account to track payments made to the life insurance policy and its cash value as it grows. This will allow you to see the growth of your policy over time.

For term life insurance policies, which typically have no cash value, you can still record your premium expenses in your spending accounts. Create an Asset Account and set the opening balance to the value of the policy. You can then track any premium expenses in your spending accounts under the "Insurance:Life" category. When the policy ends, simply close the account in Quicken.

Additionally, if you want to include your term life insurance policies in your assets and track annual policy fees, you can manually add them as expense items. These expenses can be categorised as "Insurance:Life" in your spending accounts.

It is important to note that while you can record premium payments, life insurance policies may or may not be considered assets that need to be tracked in Quicken. Whole life insurance policies with a cash surrender value should be tracked as assets, whereas term life insurance policies typically have no value and therefore may not need to be tracked.

Recording yearly dividends

To record yearly dividends, you will need to create an asset account in Quicken to maintain the cash value balance. This involves the following steps:

• Go to "Tools" in your Quicken menu.
• Select "Add Account".
• Choose "Other Asset" and name the account, e.g., "Universal Life Insurance - Cash Value".
• Input the initial cash value of the policy as the opening balance.
• If there is an outstanding policy loan, you can record it as a loan against the asset.

Once the asset account is set up, you can record yearly dividends as follows:

• Record each premium payment as an addition to the asset account.
• Deduct any expenses or insurance charges from the account.
• Add each dividend received to the account as an increase.

By following these steps, you can accurately track the cash value of your universal life insurance policy in Quicken, including any yearly dividends received. This allows you to monitor the growth of your policy's cash value over time.

Manual entry for universal life insurance in Quicken

To manually enter universal life insurance in Quicken, you will need to create a new account. You can do this by going to the Tools menu and selecting "Add Account". Select Other Asset and name it accordingly. You will then be able to assign an initial cash value to this account.

If you have an outstanding policy loan, you can record it as a loan against the asset. You will then need to record each premium payment as an addition to the asset category, and each expense and insurance charge as a reduction. Dividends and interest should be recorded as an increase.

Universal life insurance policies have a cash value that needs to be manually tracked and updated periodically as it is not automatically tracked by Quicken. This can be done by creating an asset account and maintaining the cash value balance.

To record premium payments made on universal life insurance, go to the Tools menu and select "Category List", then "Add Category". You can then record the payment as an expense.

If you want to include your universal life insurance policy as part of your assets and net worth, you can create a new account under "Other Assets and Liabilities". You can then set the opening balance to the value of the policy.

To track the particulars of your policy, go to Account Details and enter the information in the "Comments" section. This will ensure that your spouse or beneficiary can find the information if needed.

Frequently asked questions