How Cash Value Builds in a Life Insurance Policy

In order to understand what cash value is in a life insurance, we first need to understand the concept of a life insurance policy. A life insurance policy basically provides financial and monetary protection to the dependants of the insured after his or her death. A life insurance policy is a legal contract between the insurer or the insurance company and the policyholder. It ensures a guaranteed payment to the beneficiaries of the insurer upon his/her death. Various life insurance channels are present like term life, variable universal life, whole life and universal life.

A life insurance policy is comprised of three major components. These are:

Death Benefit:

┬áDeath benefit is the sum of money which is guaranteed by the insurance company to the beneficiaries of the insured upon his or her death. The death benefit amount is chosen by the insured on the basis of the estimated future requirements … Read the rest