What Does Cash Value Mean?
Cash value is the amount of money that an insurance policy is worth at a specific point in time. It is typically used in reference to life insurance policies. Many life insurance policies have investment components that can lead to an increase in their cash value over time.
Insuranceopedia Explains Cash Value
Sometimes, life insurance policies are cancelled before the policyholder dies and before the death benefit is paid. In these situations, the policyholder can receive the cash value of the policy. If the policy had been in effect for many years, and if the investments went well, then the policy could accumulate a significant amount of cash value. However, if the investments go poorly, then the cash value of a life insurance policy can be significantly decreased.