The face value is the amount payable at the death of the insured. It includes both the protection and the savings value of the policy, if there is any. The cash surrender value is the amount of savings that has built up within the policy. This amount increases during the time the policy is in force. The insured may redeem the policy for its cash value at any time, but this terminates the policy.
Interest is charged on the loan until it is repaid.
If the insured continues premium payments to age 100, he or she has made sufficient premium payments to build up the cash value to make it equal to face value at that point. Therefore, as of that date, the policy consists entirely of the savings element, and there is no actual insurance protection component remaining. This policy is similar to the straight life policy, except that the policyholder pays the total premiums on the policy in a limited number of years, usually 20 to 30, or by age 65. After that, the policy remains in force for the rest of the insured's life unless the cash value is withdrawn, at which time coverage stops. The premium on limited payment life insurance is higher than for a straight life policy because you pay all the premiums into the policy in a given number of years.