Business Glossary

policy that generates a savings element. Cash values are critical to a permanent life insurance policy. The size of a cash value buildup differs substantially from company to company.

policy that generates a savings element. Cash values are critical to a permanent life insurance policy. The size of a cash value buildup differs substantially from company to company. In many instances there is no correlation between the size of the cash value and premiums paid; in some cases there is an inverse relationship. Everything that the policyowner wishes to do with this policy while living is determined by the size of the cash value. For example, at some future time, a policyowner may wish to convert the cash value to a monthly retirement income. Its size will depend on (1) the amount of the cash value and (2) the attained age of the policy owner.