Cash Value

Cash value refers to a component of certain life insurance policies that functions as a savings account within the policy. It is a feature typically found in permanent life insurance policies, such as whole life or universal life insurance, as opposed to term life insurance, which does not accumulate cash value.

The cash value of a life insurance policy grows over time, as part of the premiums paid by the policyholder are allocated to this savings component and then invested by the insurance company.

The cash value can often be accessed by the policyholder through loans or withdrawals for various purposes such as funding retirement, paying for education, or covering unexpected expenses.