The savings element inside a whole life policy is also known as which term?

The savings element inside a whole life policy is also known as which term?

• A. Loan value
• B. Cash value
• C. Living benefit
• D. Nonforfeiture value

Answer: (B)

The savings element inside a whole life policy is the cash value. In a whole life policy, premiums stay level for life, and a portion builds up as cash value over time. This value grows tax-deferred and can be accessed later through withdrawals or policy loans, though any outstanding loan will reduce the death benefit. Other terms exist—loan value is what you can borrow against, living benefits relate to benefits you can use while alive, and nonforfeiture value is what you receive if you surrender the policy—but the term that describes the savings buildup inside the policy is cash value.

The savings element inside a whole life policy is the cash value. In a whole life policy, premiums stay level for life, and a portion builds up as cash value over time. This value grows tax-deferred and can be accessed later through withdrawals or policy loans, though any outstanding loan will reduce the death benefit. Other terms exist—loan value is what you can borrow against, living benefits relate to benefits you can use while alive, and nonforfeiture value is what you receive if you surrender the policy—but the term that describes the savings buildup inside the policy is cash value.