is the cash value the same as death benefit?

UPDATED: Jul 5, 2016

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UPDATED: Jul 5, 2016Fact Checked

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Asked July 5, 2016

1 Answer

No, the cash value is not the same as the death benefit. The death benefit is a fixed amount selected by the insured person to be paid out to the named beneficiaries upon the death of the policy holder, usually in the form of a tax-free lump sum payment. The cash value of a life insurance policy equals the total amount of premiums paid to date, minus the insurance cost and other charges assessed by the insurance provider. It's common to think of this as a forced saving account. The funds can be accessed through a loan from the life insurance policy, usually to be paid back, or by partially foregoing some of the death benefits. Depending on the fine print of the policy, any remaining cash value in the account at the time the policy holder's death is either added to the death benefit payout or is forfeited back to the insurance company.

Answered July 6, 2016 by pbanion

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