The savings component of life insurance in which a portion of each premium payment is applied. In life insurance policies, the cash value is allowed to accumulate tax-free. Over time, the cash value growth will have the effect of lowering the amount at risk for the insurer because, at the death of the insured, the death benefit is paid to the beneficiary but the cash value goes to the insured. Generally, cash values can be accessed by loans for any purpose while the insured is living, but any loans outstanding at the death of the insured will reduce the payable death benefit.
