What Is Cash Value?
Cash value is the savings portion that builds inside permanent life policies like whole or universal life. It grows tax-deferred from part of each premium and can be borrowed against or withdrawn (surrendering the policy). In the early years, most of your premium goes to fees and the death benefit, so cash value builds slowly at first.
Why it matters
Cash value is what makes permanent insurance "an asset" — but the growth rate is usually modest and accessing it reduces the death benefit.
Common confusion
Cash value is not the death benefit. The death benefit is what heirs get; cash value is what you can use while alive.
Frequently Asked Questions
Can I take the cash value tax-free?
Withdrawals up to your basis (premiums paid) are usually tax-free; gains above basis may be taxed, and loans accrue interest.
What happens to cash value at death?
Generally it reverts to the insurer unless the policy is structured otherwise; the beneficiary gets the death benefit, not both.