What term refers to the equity amount accumulated in permanent life insurance?

What term refers to the equity amount accumulated in permanent life insurance?

• A. Cash value
• B. Estate
• C. Illustrations
• D. Life insurance

Answer: (A)

Cash value is the equity built up inside a permanent life policy. Unlike term life, which provides only a death benefit for a set period, permanent policies include a savings component. A portion of each premium covers the policy’s cost of insurance and fees, and the remainder is credited to the cash value. That amount grows over time, usually tax-deferred, and can earn interest or dividends depending on the policy type. You can access it during life through loans or withdrawals, or use it to premiums. Any withdrawals or loans can reduce the death benefit and, if you surrender the policy, you receive the cash value. The other terms are not about the saved portion: estate is what you pass on after death, illustrations are projection figures, and life insurance is the contract itself, not the accumulated savings.

Cash value is the equity built up inside a permanent life policy. Unlike term life, which provides only a death benefit for a set period, permanent policies include a savings component. A portion of each premium covers the policy’s cost of insurance and fees, and the remainder is credited to the cash value. That amount grows over time, usually tax-deferred, and can earn interest or dividends depending on the policy type. You can access it during life through loans or withdrawals, or use it to premiums. Any withdrawals or loans can reduce the death benefit and, if you surrender the policy, you receive the cash value. The other terms are not about the saved portion: estate is what you pass on after death, illustrations are projection figures, and life insurance is the contract itself, not the accumulated savings.