Cash Value Account

A tax-sheltered savings account that’s part of a permanent life insurance product.

As the policyholder pays his insurance premiums, a portion of the total paid goes into a cash-value account, where it sits earning interest. Those monies may then be borrowed against-though doing so will reduce the beneficiary’s death benefit if and when death occurs.

If the insured cancels, surrenders, or stops paying on the life insurance policy, he or she is entitled to receive a portion of the cash value account, known as the cash surrender value.


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