291 – Life Insurance – Cash Value

Other Assets

 

Synopsis

Account 291

Debits

Credits

  1. The cash surrender value of all life insurance policies of which the retailer is owner and beneficiary.

  2. The increase in cash surrender value upon payment or recording of additional premium.

  3. Accrued insurance dividends and interest.

  1. The cash received at the time the policy is surrendered or cancelled.

 

 

Remarks:

The increase in cash surrender value may not necessarily coincide with the date the premium is due, in which case the entire premium should be charged to the expense account and adjusted by journal entry at the time the cash surrender value would increase.

 

The cash surrender value of life insurance represents the cash the company would get from the insurance company by surrendering the policy.  The amount of premiums more than of the increase in cash surrender values of life insurance policies should be debited to Deductions to Income – Other (Account 855).

 

Cash surrender values, and premium separation, may be obtained from the life insurance policy or the insurance agency.

 

It is recommended that a listing of all insurance policies indicating the policy number, agency, and insurance company be currently maintained and filed for immediate reference.

 

All insurance policies should be properly safeguarded in a secure location, both physically and electronically.

Note: