Cash Value
The savings component of a permanent life insurance policy that accumulates over time and can be accessed by the policyholder through loans or withdrawals.
Understanding Cash Value
In an IUL policy, cash value grows based on index-linked interest credits subject to cap and floor rates. The cash value is the foundation of the policy's retirement planning utility - policy loans are taken against this balance. Cash value is different from the death benefit; the death benefit typically equals the cash value plus a specified additional insurance amount.
Why This Matters for Retirement: Understanding Cash Value is essential for making informed decisions about tax-free retirement income strategies. Whether you are evaluating an IUL policy, planning Roth conversions, or comparing retirement vehicles, this concept directly affects your outcomes.