This article explains how to model cash flow generated from permanent life insurance using policy loans backed by Cash Surrender Value (CSV) in Planworth. You can model this strategy using either personal permanent life insurance policies or corporate-owned permanent life insurance policies.
The guidance below assumes the permanent life insurance policy has already been added to the plan. If not, please first review How to Add Permanent Life Insurance Policies Using a CSV Illustration before proceeding.
Overview of Supported Strategies
Planworth currently supports the following CSV loan strategies:
Personal CSV Loan: Borrowing personally from a personally owned permanent life insurance policy.
Corporate CSV Loan: Borrowing inside a corporation from a corporate-owned permanent life insurance policy.
Important limitation:
Planworth does not currently support IRP-style strategies where a corporate policy is used as collateral for a personal loan with a guarantee fee paid to the corporation. This is considered a gray area from a planning and compliance perspective and may be explored in the future.
Prerequisite: Ensure the Policy Exists in the Plan
Before adding a CSV loan, confirm that the permanent life insurance policy exists in the plan:
Personal policies must be added under Personal Permanent Life Insurance.
Corporate policies must be added under Corporate Permanent Life Insurance.
Policies can be added using a CSV illustration file provided by the insurance carrier. This CSV file is unrelated to the term CSV when used in the context of policy loans, where CSV refers to Cash Surrender Value.
Leveraging a Personal Permanent Life Insurance Policy
When to Use
Use a Personal CSV Loan when:
The policy is personally owned.
The loan proceeds are received personally.
The cash flow is intended to support personal retirement or lifestyle expenses.
Where to Find the Toggle
Open the Financial Insights Engine.
Select Add Toggle.
Navigate to Income / Expenses.
Choose CSV Loan.
How to Configure a Personal CSV Loan
Within the CSV Loan toggle, configure the following fields:
Debtor / Loanee: Select the individual borrowing from the policy.
Policy: Choose the permanent life insurance policy providing the collateral.
Amount / Year: Enter the annual loan amount.
Start from Retirement: Enable if the loan begins at retirement.
Recurring: Toggle on for annual borrowing.
End Date: Set when borrowing stops.
Frequency: Typically set to Every Year.
Growth: Use 0 percent unless escalating loan amounts are required.
Interest Rate: Enter the policy loan interest rate.
Loan to CSV Percent (Collateral): Commonly 100 percent, unless modeling conservatively.
Interest Tax Deductible: Optional, depending on tax treatment assumptions.
Capitalize Interest: Enable if interest is added to the loan balance rather than paid annually.
A schedule is automatically generated showing the annual loan amounts, interest rate, and collateral assumptions.
Leveraging a Corporate Permanent Life Insurance Policy
When to Use
Use a Corporate CSV Loan when:
The policy is owned by a corporation.
The loan proceeds stay inside the corporation.
The cash flow supports corporate expenses, investments, or remuneration strategies.
Where to Find the Toggle
Open the Financial Insights Engine.
Select Add Toggle.
Navigate to Corporate Toggles.
Choose Corporate CSV Loan.
How to Configure a Corporate CSV Loan
Within the Corporate CSV Loan toggle, configure the following fields:
Corporation: Select the corporation that owns the policy.
Permanent Insurance: Choose the corporate permanent life insurance policy.
Amount / Year: Enter the annual corporate borrowing amount.
Start from Retirement: Enable if loans begin at retirement.
Recurring: Enable for ongoing annual loans.
End Date: Define when borrowing stops.
Frequency: Typically Every Year.
Interest Rate: Enter the corporate policy loan rate.
Loan to CSV Percent (Collateral): Commonly set to 100 percent.
Interest Tax Deductible: Enable if modeling deductible interest.
Capitalize Interest: Enable if interest is added to the outstanding loan balance.
Planworth will automatically generate a year-by-year loan schedule within the corporate module.