What Is Cash Value Life Insurance? Definition & Benefits

What Is Cash Value Life Insurance? Definition and Benefits

By Catherine Brock – Updated Jul 1, 2025 at 12:21 AM

Key Points

Cash value life insurance combines savings with a death benefit; more costly than term insurance.
Policyholders can use cash value for loans or withdraws, impacting the ultimate death benefit.
Permanent coverage, like cash value insurance, does not expire if premiums are maintained.

Cash value life insurance is a financial product that combines a death benefit with a savings component. It's a more expensive alternative to term life insurance, which only has a death benefit. Let's explore how cash value life insurance works, its benefits, and whether it is right for you.

Loading paragraph...

A paper cutout family under an umbrella that reads life insurance. — Image source: Getty Images.

Loading image...

Loading paragraph...

Liquidity

Liquidity is the extent to which an asset can be bought or sold quickly without affecting the asset's price. Here you will learn how the importance of liquidity and how to calculate it.

Loading definition...

Loading paragraph...

Loading pitch...

Loading paragraph...

Loading pitch...

Loading paragraph...

Insurance Stocks to Invest in 2025

Insurance companies can produce great returns no matter what the economy. Consider these top insurance picks for your portfolio.

Primary vs. Contingent Beneficiaries: What You Need to Know

Primary beneficiaries are the first ones to inherit your assets upon your death; contingent beneficiaries are second in line.

What Happens to the Ownership of Stocks After a Person Dies?

Most states and brokerages allow for a transfer-on-death beneficiary designation. Stocks can avoid probate in most cases.

Planning to Retire in 2025: A Complete Guide

Get all the information you need to retire when you want in this detailed retirement planning guide.

Loading hub_pages...

Loading paragraph...

Loading pitch...

About the Author

Catherine grew up in Southern California wearing a lot of black and trying to perfect the art of sarcasm. Prior to joining The Fool as a contract writer, Catherine was climbing the corporate ladder in marketing roles and dabbling in too many side hustles. When she's not writing, she can be found riding a horse in the country or shopping online for clothes.

XMFCatherineJB

@catherinejbrock

The Motley Fool has a disclosure policy.