Cash value is a value accumulated within certain life-insurance contracts. It is different from the death benefit and may be affected by charges, investment results, surrender rules and other policy conditions.
The distinction that matters
Cash value, surrender value and an illustrated future value are not interchangeable. An overseas cash-value explanation should not be applied automatically to an Australian risk-only life policy.
What to check
- Guaranteed versus illustrated values.
- Charges deducted from the policy.
- Surrender and withdrawal conditions.
- Effect of loans or withdrawals on the death benefit.
Example to discuss
Ask for the amount available on surrender today and the assumptions behind a future illustration; those can be very different numbers.
This is a hypothetical comparison, not a customer claim or a determination of cover.
Jurisdiction and scope
This is an explanation of terminology found in overseas life-policy material. It does not establish that a similarly named product is currently offered in Australia, or that US guarantees, tax treatment or legal rules apply here.
Sources and further reading
General information only. The policy, schedule and applicable rules determine the actual position. For a personal decision, use an appropriately qualified adviser or the relevant provider.