Ace California Life & Health Insurance Exam 2026 – Burst Into Your Bright Insurance Future!

Question: 1 / 400

In life insurance, what does "cash value" refer to?

The total premiums paid over the life of the policy

The savings component of a permanent life insurance policy that accumulates over time

Cash value in life insurance specifically refers to the savings component of a permanent life insurance policy that accumulates over time. Unlike term life insurance, which provides death benefit protection without any cash value accumulation, permanent life insurance policies, such as whole life or universal life, incorporate a cash value feature.

As premiums are paid, a portion of each premium goes towards building this cash value, which grows on a tax-deferred basis. Policyholders can access this cash value through loans or withdrawals, making it a valuable financial resource during the lifetime of the insured. Over the years, this cash value may increase, offering policyholders flexibility and additional financial options as they plan for their future. This accumulation differentiates it from the other concepts listed in the question.

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The value of a policy if it is surrendered after a specific period

The amount payable upon death of the insured

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