ALU 301: Advanced Life Insurance Underwriting

What is life insurance cash value?

Cash value is the savings component built into permanent life insurance policies like whole life and universal life. A portion of each premium payment goes into a cash value account that grows tax-deferred over time — at a guaranteed rate in whole life policies or at a variable rate tied to market indexes in some universal life policies. You can borrow against the cash value, make withdrawals, or use it to pay premiums. Cash value makes permanent policies more expensive than term life, but adds a financial asset dimension to the coverage.

What is the difference between death benefit and cash value?

The death benefit is the amount paid to beneficiaries at death. Cash value is a savings component in permanent policies that grows over time. Beneficiaries receive the death benefit, not the accumulated cash value.