Cash Value (Permanent Life)
Savings component of permanent life insurance that grows tax-deferred.
Full explanation
Cash value is the savings component of a permanent life insurance policy (whole life, IUL, universal life). A portion of each premium is allocated to cash value, which grows tax-deferred. You can borrow against cash value (with interest) or surrender the policy for the cash value (forfeiting the death benefit). Whole life cash value grows on a guaranteed schedule with potential dividends from mutual carriers. IUL and UL cash value grows based on indexed performance or declared rates. Cash value typically grows slowly in early years (often $0 in year 1 due to fees) and accelerates after year 10-15.
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