# ASC 325-30-25: Investments—Other — Investments in Insurance Contracts — 25 Recognition

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/325/30/#25-recognition)

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## ASC 325-30-25: 25 Recognition

[Read section](https://asc.understandingaccounting.org/asc/325/30/#25-recognition)

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##### [325-30-25-1](https://asc.understandingaccounting.org/asc/325/30/#325-30-25-1)

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An investment in a life insurance contract shall be reported as an asset.

#### Exchange of Mutual Membership Interests for Stock in a Demutualization

##### [325-30-25-1A](https://asc.understandingaccounting.org/asc/325/30/#325-30-25-1A)

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An entity shall recognize stock received from a demutualization and subsequently follow the guidance in Subtopics 320-10 or 323-10 as applicable.

### Life Settlement Contracts

##### [325-30-25-2](https://asc.understandingaccounting.org/asc/325/30/#325-30-25-2)

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An investor shall elect to account for its investments in [life settlement contracts](https://asc.understandingaccounting.org/glossary/l/#life-settlement-contract "A life settlement contract is a contract between the owner of a life insurance policy (the policy owner) and a third-party investor (investor), and has all of the following characteristics: The investor does not have an insurable interest (an interest in the survival of the insured, which is required to support the issuance of an insurance policy). The investor provides consideration to the policy owner of an amount in excess of the current cash surrender value of the life insurance policy. The contract pays the face value of the life insurance policy to an investor when the insured dies.") using either the investment method or the fair value method. The election shall be made on an instrument-by-instrument basis and is irrevocable. The election shall be supported by concurrent documentation or a preexisting documented policy for automatic election.