Snapshots can expose sensitive data

Yes, in the scenario you described, they can.

First of all please note having your home encrypted and only decrypted on login is liable to fall foul of the limitations of snapd. If you need to have your home encrypted I recommend you opt for full-disk encryption instead.

Second, from 2.39 note snap remove will run an automatic snap save. To address your concerns, disable this with snap set system snapshots.automatic.retention=no.

Third, and again to address your concerns, don’t run snap save.