What Does Cash Value Of Life Insurance Mean? 
The cash value is the portion of whole life insurance that has built up so far in your cash account . Think of it like money in the bank . The way whole-life is designed , it has a level premium for the length of the policy or until it is paid off . What 's really happening is as the cash account grows , the actual insured amount reduces by the same amount . You become more and more self-insured each year . If you buy $ 100,000 whole-life policy , in the begining your insured amount is $ 100,000 and your cash value is zero . Many years later your cash value is $ 40,000 and the insured amount is $ 60,000 for a total death benefit of $ 100,000 . Several more years later your cash value is $ 90,000 and the Insured amount is $ 10,000 for a death benefit of $ 100,000 If you live to age that the policy endows -LRB- usually age 95 or 100 on older policies and age 121 on newer ones -RRB- the cash value is $ 100,000 and the insured amount is zero . You are now self insured . You can use the cash value while you are living by taking policy loans which are actually loans against the cash build up in your policy not actually withdrawals from the policy or you can cash surrender the policy and walk away with the cash . If you have a participating policy that pays dividends , you can have additional cash value and death benefit build up from that . 