What is Cash Value?
Insurance glossary entry on BeCovered.ai for the term "Cash Value": Savings component inside permanent life insurance that grows tax-deferred and can be accessed by loan or withdrawal. Scope: plain-language meaning for coverage discussions; confirm definitions on your policy forms.
Savings component inside permanent life insurance that grows tax-deferred and can be accessed by loan or withdrawal.
Understanding Cash Value
Cash value mechanics differ between whole, universal, and variable universal life. Loans accrue interest; withdrawals may trigger surrender charges in early years and can risk lapse if poorly managed.
Examples
- Policyowner borrows against cash value for a down payment on a home.
- Partial withdrawal to supplement retirement income, reducing death benefit.
- Surrender for cash minus charges when ending the contract.
Common Questions About Cash Value
Is cash value the same as investment return?
No—look at credited rates, caps, floors, and insurer expenses. Illustrations are hypothetical unless guaranteed columns apply.
What happens to cash value when I die?
Many contracts pay death benefit only; cash value may not pass in addition—policy form language matters. Review the illustration and base contract.
Related Insurance Types
Related Terms
Rider
An add-on provision to an insurance policy that changes or extends coverage.
Premium
The amount you pay to your insurance company for your coverage, typically monthly or annually.
Coverage Limit
The maximum amount your insurance company will pay for a covered claim.
Exclusion
Specific situations, conditions, or types of damage that your insurance policy does not cover.