Cash Value
Terms related to the financial mechanics, value, and tax treatment of policies.
What Is Cash Value?
Cash value is the savings or investment component built into permanent life insurance policies such as whole life, universal life, and indexed universal life. A portion of each premium funds the death benefit, and the remainder accumulates as cash value on a tax-deferred basis. In whole life policies, cash value grows at a guaranteed rate (plus non-guaranteed dividends — not guaranteed). In indexed universal life (IUL) policies, growth is tied to a market index — typically with a floor of 0% (protecting against loss) and a cap rate typically in the range of 8–12%, after accounting for policy fees. Cash value can be accessed via policy loans or withdrawals and can fund retirement income, education costs, or emergencies.
Nevada Context
Nevada policyholders benefit from strong state-level consumer protections around cash value access, including mandatory disclosure of loan interest rates and surrender charge schedules.
How It Affects You
Cash value grows tax-deferred and can be borrowed against without a credit check or income verification. Unpaid loans reduce the death benefit, and withdrawals above cost basis may be taxable.
Cash Value in Practice
After 15 years, a Nevada whole life policyholder has accumulated an illustrative $85,000 in cash value, which they borrow against tax-free to fund a business expansion — repaying at the carrier's loan interest rate.
Dollar amounts shown are illustrative. Actual amounts vary by carrier, applicant age, health status, and individual underwriting.
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