What Is The Cash Value Of A Whole Life Insurance Policy? 
When a life insurance company offers to provide a death benefit regardless of when the insured dies and charges a level premium as long as the policy is in force , the company is issuing a whole life policy . If you search the internet you can see many examples of mortality tables . The most obvious fact is that the number of people surviving at a given age reduces with every passing year . Another observation is that the rate at which they die accelerates until very few 99 year old males live to see 100 . If the life insurance company is going to provide a death benefit to that 99 year old for one year the cost would be at least half of the death benefit . That is , a $ 50,000 1 year term policy on a 99 year old -LRB- if such a policy were available -RRB- would cost in excess of $ 25,000 . A whole life policy offers that coverage at the same level premium they charged when the policy was started . The way that they do that is that they accumulate money from the higher premiums to offset the cost of insurance when the premiums would otherwise become astronomical . This money becomes the cash value of the policy , or the surrender value of the policy . At any time the company is willing to exchange the surrender value of the policy in exchange for taking away the requirement that they pay the death benefit . Now , this cash value can be taken in a variety of ways so it isnt really so cut and dry . The point is , when you relieve the company of their obligation to pay the death benefit , they will give you the cash surrender value . It is the cash value that allows the company to maintain a level premium . Most whole life policies pass a point where the premium for the permanent plan is less than a newly issued 1 year term insurance plan . 