The Life Insurance page records policies that would pay out when the person they cover dies. The benefit is paid into your plan in that year, and any premiums you enter are charged as a cost while the cover is in force.

A death benefit counts in full

Life insurance proceeds are not taxable income to the people who receive them. That makes a dollar of death benefit worth more to your heirs than a dollar in a traditional IRA, which they pay income tax on as they withdraw it. So the benefit arrives whole, with no tax taken off - the same treatment property gets, and for a similar reason.

It is money the plan can actually use

The benefit is not simply added to the total at the end. It lands in the portfolio in the year of that person's death, which means it can be spent, and anything left grows from there and reaches your heirs through the ending balance like any other dollar. In a couple, that is the whole point: when one of you dies a Social Security payment stops and often a pension changes, and the policy is what fills the gap. So unlike the legacy goal, which is only ever reported alongside your chance of success, a policy that pays out mid-plan can raise the chance of success itself.

Cover that ends before you do pays nothing

This is the part worth checking, and the reason the page asks when your cover ends. A 20-year term policy bought at 55 ends at 75. If your plan runs to 95, that policy is not in force when you die, so it contributes nothing to what you leave behind - even though you paid premiums for twenty years. The policy list says so directly: a policy in that position is marked "Ends before age N, pays nothing" rather than quietly counting as zero.

Choose Permanent in the "cover ends at age" list for a policy that has no end date - whole life, universal life, or guaranteed universal life - which pays whenever death comes.

Each policy is tested against the plan-to age of the person it insures, not the end of the plan. In a couple where one person's plan runs longer, their policies are judged against their own age.

Premiums

The premium is optional, and only worth entering if you want the cost reflected in your cash flow. It is treated as level - not adjusted for inflation - because term and permanent policies normally have a fixed premium written into the contract. That makes it the one dollar figure in the planner that is not inflated forward, which is deliberate rather than an oversight. Premiums stop being charged the year after cover ends, so a term policy stops costing money exactly when it stops paying.

Cashing a policy in

A permanent policy builds a cash value you can take by surrendering it, and the real question people have about one in retirement is whether it is still worth keeping. Enter the cash value it has today, roughly how fast it grows, and the age you would cash it in.

All three parts of that decision are modelled together, because any one of them alone would flatter it. At the age you choose, the cash value is paid to you as money you can spend - and from that age the death benefit stops and the premium stops too. That is what makes the trade-off honest: you are giving up the payout to your heirs, and no longer paying for it, in exchange for money now.

Because of that, cash value is never added to what you leave behind. For most permanent policies the two are not additive - the insurer pays the death benefit and the cash value is absorbed into it - so counting both would be the same money twice. A policy either pays its benefit or is cashed in, never both, and the plan enforces that rather than asking you to remember it.

The cash value fields do nothing on their own. Leave the cash-in age set to Never and the policy simply runs as normal.

What is not modelled

Tax on surrendering is not applied. Any gain above what you have paid in is ordinary income to you in the year you cash the policy in, so for an older policy with a large gain the proceeds shown here are higher than what you would actually keep. Working out the tax needs a cost basis the page does not ask for, and inventing one would be worse than telling you it is missing.

Policy loans are not modelled either - you cannot borrow against the cash value and keep the cover. Only cashing it in outright is available.

Estate tax is not modelled at all, federal or state - a policy you own is generally inside your taxable estate, which matters only for estates far larger than this planner is built for. Employer-provided cover that ends when you retire should be entered with a cover-end age matching your retirement, or left out.