What does "cash value" mean in a permanent life insurance policy?

"Cash value" in a permanent life insurance policy refers to the savings component that accumulates over time as part of the policy. This cash value grows at a predetermined rate and can be accessed by the policyholder through loans or withdrawals, providing them with liquidity if needed. In addition to the death benefit component that provides a payout upon the insured's death, the cash value serves as a form of savings or investment.

Permanent life insurance, unlike term insurance, includes this cash value feature, which can also be a useful tool for policyholders to utilize funds for various purposes such as emergencies, retirement, or other financial needs. The ability to borrow against the cash value without having to undergo a credit check is another significant benefit of this component, making it an attractive option for individuals seeking both life insurance coverage and a savings mechanism.