Does whole life insurance have cash value?


Yes. Whole life insurance policies come with a cash value account that accumulates value over time.

Rebecca Shoenthal author photo


Rebecca Shoenthal

Rebecca Shoenthal

Licensed Insurance Expert

Rebecca Shoenthal is an insurance editor and licensed Life, Health, and Disability agent at Policygenius in New York City. Previously, she worked as a nonfiction book editor. She has a B.A. in Media and Journalism from the University of North Carolina at Chapel Hill.

Published June 3, 2021|2 min read

Policygenius content follows strict guidelines for editorial accuracy and integrity. Learn about our

editorial standards

and how we make money.

Whole life insurance is a type of permanent life insurance, which is designed to provide coverage for your entire life. The type of whole life insurance policy you choose determines how the cash value component grows or shrinks overtime. Unlike term insurance, a whole life policy cannot be convertible or renewable.

Not all cash value accounts are the same, so it’s important to know the difference when shopping for whole life insurance. Below we’ll compare the different types of whole life insurance so you can decide what type of policy is right for you.

Ready to shop for life insurance?

Start calculator

How cash value works

A whole life policy is permanent protection that lasts your entire life or until age 100, depending on the policy selected. If you die while the policy is active, your beneficiaries receive a death benefit, and if you are still living at age 100, the insurer will pay out the face value to you.

A cash value account is a benefit of whole life insurance you can access while you’re alive. It’s separate from the death benefit and can grow overtime, similar to other savings accounts. The cash value can be accessed in the form of policy loans (borrowing money from the policy) or by surrendering the policy to receive the existing cash value. 

Cash value for traditional whole life insurance

Cash value grows at a fixed rate for traditional whole life insurance. Traditional whole life insurance policies offer coverage with level premiums paid up to a certain age (either age 65, 99, or 121) or for a specific period of time (usually 10 or 20 years). Cash value for these types of policies accumulates until age 100 and the face value (death benefit) remains level. 

Traditional whole life policies earn a specified guaranteed rate of return. Once the cash value has accumulated for a certain number of years, typically three years, the owner can borrow against the policy.

How does a whole life policy build cash value?

Cash value works differently depending on the type of whole life insurance policy you have. The different types of whole life insurance policies that have cash value include:

  • Indexed whole life insurance: Earns interest based on an investment index chosen by your provider. 

  • Single-premium whole life insurance: Cash value grows at a fixed rate set by your insurer with a minimum guaranteed rate of return.

  • Variable whole life insurance: The cash value is invested in various funds offered by the insurance company, including mutual funds and annuities. Investment performance depends on market trends, so the policyholder bears all investment risk.

  • Whole life insurance for children: The cash value will grow or shrink according to which type of policy you select. Typically, whole life policies for kids are traditional whole life so the cash value will grow at a fixed rate. 

Final expense whole policies including guaranteed issue whole life insurance and simplified issue whole life insurance do not have cash value accounts and do not accumulate funds over time. Your premium payments go solely toward the death benefit. To learn more about the investment options, payment schedules, and growth, we recommend talking to a licensed independent broker or agent. 

Cash value for other types of permanent life insurance policies 

Other types of permanent life insurance – including Universal Life, Indexed Universal Life, Variable Life, and Variable Universal Life – also build cash value. The cash value works differently for these policies than it does for whole life insurance:

Whole life insurance cash value chart

Death BenefitCash valuePremiumsLoans/Partial SurrendersWho bears investment risk?
Whole LifeFixed, guaranteed minimumGuaranteedFixedLoans availableInsurer
Universal LifeAdjustable, guaranteed minimumGuaranteed minimumFlexibleLoans and Partial surrendersInsurer
Variable LifeVariable, guaranteed minimumNot guaranteedFixedLoans availablePolicyowner
Variable Universal LifeVariable & adjustable, no guaranteed minimumNot guaranteedFlexibleLoans and Partial surrendersPolicyowner

If you’re wondering what type of cash value growth is best for your investment needs, reach out to a Policygenius agent for free to learn more. 

Whole life insurance cash value FAQs

Does term insurance have cash value?

No. Term life insurance only provides a death benefit. Only permanent life insurance policies can build cash value.

What is a whole life insurance policy’s cash value?

The cash value acts as an alternate savings vehicle. It is separate from the death benefit and builds value differently depending on the type of policy you choose.

How does a whole life policy build cash value?

It depends on which type of whole life insurance you have. For a traditional whole life insurance policy, the cash value grows based on a guaranteed minimum interest rate set by the insurer. 

More about

Life Insurance

Glossary of life insurance terminology & definitions

Life insurance terminology doesn't have to be confusing. Here are definitions of the most common terms and phrases you'll find in a policy.

Read more

Understanding your life insurance policy

Once you officially have life insurance, you’ll get a policy that goes into the nitty-gritty of your coverage. We’ve broken down what it all means.

Read more

What is a life insurance death benefit?

The death benefit is the tax-free payout your beneficiaries receive if you die; it's essentially what you're paying for when you sign up for life insurance coverage.

Read more