The cash value of an insurance contract, also called the cash surrender value or surrender value, is the cash amount offered to the policy owner by the issuing life carrier upon cancellation of the contract. This term is normally used with a life insurance or life annuity contract.
Cash-value life insurance is a type of life insurance policy that pays out upon the policyholder's death, and also accumulates value during the policyholder's lifetime. The policyholder can use the cash value as a tax-sheltered investment (the interest and earnings on the policy are not taxable), as a fund from which to borrow and as a means to pay policy premiums later in life, or they can pass it on to their heirs. Whole life, variable life and universal life are all types of cash-value life insurance. Cash-value insurance is also known as permanent life insurance because it provides coverage for the policyholder's entire life.
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