What Happens To The Cash Value Of Life Insurance? 
There are several variables that will determine what happens to the Cash Value -LRB- CV -RRB- . First , as Jerry was saying , in the later years or life of the policy , the Cost of Insurance -LRB- COI -RRB- exceeds the premium you are currently paying -LRB- which hopefully has been level since you purchased it -RRB- . When this happens , the premium would need to increase to keep up with the cost however when there is CV , this is used to pay the difference . Ideally , the crediting rate on the excess funds is enough to provide you with growth even while paying the additional premium . When you take a withdrawal or loan , this effects the CV as well . With a loan , keeping this simple , the death proceeds will be reduced by how much the outstanding loan is . A withdrawal will generally drop the death benefit immediately . When there is enough crediting interest , even with loans and withdrawals , we have seen policies continue to grow . Jerry said it well , Life Insurance is an Asset for you to use . Last , if you have your policy designed with an Increasing Benefit , usually called `` option b '' , the CV will be included into the death benefit . This is one what to stay ahead of inflation especially when you are expected to live a long life . 