What is the Cash Value of a Life Insurance Policy?
Answer:
Cash value is a term that you will come across


when dealing with permanent forms of life insurance such as whole life insurance. These policies accumulate a cash value over time. A policyholder can surrender the policy and “cash out” receiving the cash value of the policy.

The cash value can either be pre-determined and fixed or it can vary based on the premiums paid and market conditions depending on the type of life insurance policy purchased. By surrendering the policy and accepting the cash value, the insurance policy becomes null and void.

The cash value of a policy can often be used to pay premiums or can be taken out as a loan for other expenses. Whole life insurance, variable life insurance , and universal life insurance accumulate cash value while term life insurance does not.

When surrendering the life insurance policy for cash value, the cash value is paid as a lump sum. Depending on the policy, you may have to pay a surrender fee to the insurance company out of the proceeds.
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