How to track a Kai-Zen plan/investment in MD?

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jason

23 Dec, 2024 08:30 PM

I have a Kai-Zen personal pension plan which is essentially an indexed universal life insurance policy that you pay for over time (5 years for mine) The policy will either be paid out as a death benefit or you can borrow from the amount of the policy with any remaining amount paid upon death to your beneficiaries. I plan to borrow from mine in retirement. I'm curious about the best way to track this in MD. I created an Asset and as I paid the annual premiums those dollars ended up in that asset. But the life insurance plan is no worth much more than the premiums.

Should I have used another type of account other than an Asset? How do I account for the increased value? And I'm guessing when I start taking loans from it I just put it as the category when those funds end up in my bank account.

Thanks for any advice!

  1. 1 Posted by dwg on 23 Dec, 2024 10:55 PM

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    To change the value of an asset you need to use a revaluation category you create to draw funds from to raise the value of the asset. This is a standard accounting type practice.

    The only other type of account you could have used is an investment type account. To change value in these though you have to add updated values of each unit in the investment. Shares being the obvious example where you add a new per share price to indicate the current value.

  2. 2 Posted by jason on 25 Dec, 2024 06:37 PM

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    Okay. That makes sense. And the new category should be an Income category
    since I'm increasing the value of the asset (like dividends for an
    investment)? And then when I borrow against the policy it'll subtract from
    the category?

    Thanks!

    On Mon, Dec 23, 2024 at 4:56 PM dwg <[email blocked]> wrote:

  3. 3 Posted by dwg on 25 Dec, 2024 09:07 PM

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    By all means use an Income category.

    Strictly speaking, from an Accounting perspective, you would not use the same category.

    In Moneydance it depends what you want to show. If you just want to show the current value of the policy it is just a transfer from that account to where the money has gone to, I presume a bank account.

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