Life Insurance Applications often ask about Net Worth. They do so because they want to ensure that a person is over insuring themselves needlessly (or maliciously).
But for most people on most policies Net Worth doesn't matter too much. Most of the time people have enough Income to justify the amount of Life Insurance they ask for.
I'm not sure that the asker wan't asking if life insurance counts toward your personal net worth.
If that is the question, the death benefit does not count because it has no value unless you are dead. So while you are living it adds zero to your net worth.
However the cash value built up in a whole-life policy definitely adds to your net worth. That is your money just the same as money in a bank account.
If your question is about applying for life insurance, the answer is yes. An underwriter will want to know your net worth along with your annual income and time in your current occupation. This information is needed in addition to height, weight, age, place of residence, health, medical history and lifestyle. All of these factors are used to calculate your mortality.
If your question is about counting life insurance as an asset in your net worth, the answer is maybe. If you have term life insurance, then no, the face amount is not counted as an asset. However if you have a cash value plan, yes the current cash value of your whole life or universal life insurance is part of a person's net worth..
.JPG){kind=avatar}
But for most people on most policies Net Worth doesn't matter too much. Most of the time people have enough Income to justify the amount of Life Insurance they ask for.
If that is the question, the death benefit does not count because it has no value unless you are dead. So while you are living it adds zero to your net worth.
However the cash value built up in a whole-life policy definitely adds to your net worth. That is your money just the same as money in a bank account.
If your question is about counting life insurance as an asset in your net worth, the answer is maybe. If you have term life insurance, then no, the face amount is not counted as an asset. However if you have a cash value plan, yes the current cash value of your whole life or universal life insurance is part of a person's net worth..