Readers Question?

What does cash value on a life insurance policy mean?

Debbie

Dallas, Texas

Great Question.

Cash value on a life insurance policy means.

This is the money that is available for loans or withdrawals. Term life insurance does not have cash value because it pays out when the policy holder dies or according to the conditions specified in the agreement.

Now there is cash value on permanents life insurance policy that covers the entire life. It remains in force till the policy matures or pays out, or the owner stops paying the premium or on death of the insured. This type of life  insurance has a cash value. This cash value is accessible to the owner of the policy NOT the insured.

Term life insurance is a temporary type of life insurance. This provides coverage for a limited period. This type has no cash value that is on the death of the insured; the beneficiary will get death benefits like funeral cost, death cost and replacement of wages of the insured. However if the insured does not die within the insurance period, the owner of the policy will get nothing in return that is there is no cash value. This is the cheapest of the life insurances. That is buy a term life insurance rather than a permanent life insurance which is costlier and invest the difference between the permanent life insurance and the term life insurance to make profit. Term life insurance is considered profitable and cheap life insurance.