Cash Value
The savings component of some permanent life insurance policies that grows over time on a tax-deferred basis. Policyholders can often borrow against or withdraw from the cash value.
Detailed Explanation
The cash value growth is typically based on a guaranteed interest rate or the performance of underlying investments, depending on the type of policy.
Practical Example
Robert has a whole life insurance policy that has accumulated a significant cash value over the years. When he needed funds for a home renovation, he was able to take out a policy loan against the cash value.
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