Should the insurance benefit be on the asset side of the beneficiary’s economic balance sheet?
Death benefit: No, but it can cancel out a bequest liability
Living Benefits such as cash value: yes, on traditional
No. The death benefit is contingent on 1) the insured dying and 2) the insured maintaining the same beneficiary designation. Thus, it is not counted as an asset on the beneficiary’s economic balance sheet.
As mentioned in a previous post, the only time life insurance is included on the owner’s financial or holistic balance sheet is when the policy has cash surrender value - in which case the CSV is the only number recorded as an asset.
If the insurance has term policies that have a cash surrender value, then the benefits of that insurance would be considered on the asset side of the beneficiary’s economic balance. For this, one must primarily have clarity on whether your insurance policy is a Liability or an Asset. For instance, the policies for your two wheeler insurance will be your liability- this means the liability insurance coverage would help you to cover the costs of a driver’s property and physical injuries if you’re the cause of an accident that took place. Basically, if you apply for liability insurance, the insurance provider shall ensure to cover costs for the injured driver’s damaged car, minus your deductible, and all of that up to your covered limit. On the other hand, if your insurance plan is an asset, it gives you coverage against any unanticipated risks.
However, an insurance expense is neither an asset nor a liability. That’s why you’ll see it never shows up in the balance sheet. Also, life insurance is not an asset, as it does not have a cash surrender value.