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A life insurance policy with cash value may be considered an investment. At some companies, a portion of the premiums are put into a cash savings account, earning interest with potential tax savings.1 Aflac’s plans function differently, but still offer a variety of benefits like portability and renewability. Some life insurance plans with cash value allow the policyholder the option of withdrawing funds that can help pay for necessary expenses. Read on to learn what cash value life insurance is, some types of policies that offer cash value, and ways to access these funds.
Table of Contents
Life insurance with cash value is a type of permanent policy that can build funds over time through the cash value component. Cash value can function in a variety of permanent plans, including whole, universal, variable, and indexed life insurance.
The two main components that make up a life insurance policy are the death benefit and the cash value. The death benefit is the part of the plan that the beneficiaries receive later on. You can predetermine what you would like this face value to be upfront. At some companies, the cash value of the life insurance policy grows separately in a tax-deferred account.1 Aflac utilizes a different route, so it depends on your preference.
The cash value portion of this life insurance plan can be particularly appealing because you may be able to access the money early. One can do this by taking out a loan against the policy, surrendering the policy, or making a withdrawal.1
Many people think the cash value portion of the life insurance plan may limit their options. However, there are a variety of permanent policy types that can operate with this feature. Typically, term life insurance does not have cash value, but it can save you money upfront if planned wisely.
Below are a few types of life insurance policies that may have a cash value portion. Knowing your options is crucial when making key decisions about which life insurance plan will work best for you.
Whole life insurance is a type of permanent insurance that lasts the entire life of the policyholder, with premiums being paid regularly. It’s believed that whole life is one of the most popular choices in the life insurance market. The cash value of whole life insurance can still grow with potential tax savings, and the death benefit is guaranteed, so long as the premiums are paid (subject to limitation and exclusions). The premiums in this type of plan are usually fixed.
Aflac offers a whole life insurance plan option that requires no medical exam and is portable, so you can take it with you wherever you go. Get a quote and more information to see if this policy type makes sense for you.
While whole life insurance and universal life insurance have a few similarities, there is one key difference. Many universal life insurance plans allow you the ability to change the value of premium payments.2 This may give you more adjustability in different seasons of life.
With universal life insurance, you can scale the death benefit up or down depending on your unique circumstances.2 The cash value of a universal life insurance policy is helpful because it can be used to pay for the premiums or other expenses, as needed.2
Variable life insurance fits its name nicely, as it has many variables. In this type of plan, you have greater access to investment tools, like cash value.3 This type of plan tends to involve more risk, as the cash value will grow or diminish depending on how the investments chosen are doing.3
This may be a great route if you have experience with investment accounts, are comfortable taking risks, and aim to grow your cash value over time.
An indexed life insurance plan has a greater relationship with the stock market, as this is what is used to determine growth.4 How the index chosen performs directly impacts the rate of return on the cash value within the life insurance policy.4
While there is a certain level of risk involved in an indexed universal life insurance plan, you can typically still secure a guaranteed minimum interest rate.4
Don’t wait until it’s too late. Help cover yourself and your family with coverage from Aflac.
Get StartedOne of the major appeals to a cash value life insurance plan is the ability to access the money while you are living.1 There are a few different ways this can happen, including getting the cash surrender value, but it depends on your specific plan and the insurance company you choose.
Term life insurance usually does not have a cash value, but if you are interested in one of the permanent types above, you may have more options.
Some life insurance plans allow you to tap into the cash value of the account to pay for the premiums.1 This can be particularly helpful if new and unexpected expenses arise in other parts of one’s life. This may impact the value of the death benefit over time, so we advise you to consider your options. Not all insurance companies allow this, so we recommend you chat with an agent.
Another way to access money from your life insurance policy is taking out a loan against the cash value of your plan. This can allow you to borrow the expected cash value of your plan, without surrendering the plan. Outstanding loan amounts may reduce the death benefits in the event of a the death of the policyholder before the full repayment of the loan, so we advise you speak with a financial professional.1 Not all plans work the same way, so chatting with an agent about how your life insurance plan works is crucial.
Some insurance companies will allow you to withdraw money from your policy’s cash value savings account. We recommend you do not take out more money than what you have paid into the account so far because doing so may reduce the death benefit.1
To access the cash value of your plan, you may have to surrender part of your life insurance policy. Depending on the company and plan you choose, you may be able to withdraw money and only surrender part of the plan. However, getting your cash surrender value can also decrease the value of the death benefit.1
Cash value life insurance offers many benefits, including:
To determine whether cash value life insurance is right for you, consider your financial situation and goals. If you want to grow funds over time that you can access while you’re still alive and are willing to pay higher premiums, you may want to take advantage of a policy with cash value, such as whole life insurance.
Having a life insurance plan can help protect your loved ones if your main source of income is lost. Additionally, having a policy with cash value can give you access to funds when you need them. From taking out a policy loan to getting the cash surrender value of life insurance, there are several ways you can access this component.
Aflac’s whole life insurance plans can help provide for your family long-term and help you in an emergency. Try our life insurance calculator to see how much life insurance you may need, and chat with an Aflac agent about your options if you need additional support.
Here are some advantages cash value life insurance can offer:
Cash value life insurance accumulates a cash value over time as your policy increases in value. You can use the money from this growth component to help pay for future expenses, such as college tuition or retirement costs.
Cash value life insurance policies provide you with lifelong coverage so that no matter when you pass away, your loved ones will receive a death benefit payout. This means you don't have to worry about your coverage expiring and having to find a new policy.
One of the major benefits of cash value life insurance is that you can access the cash value in multiple ways. Depending on the type of policy, you may have the ability to take out a loan against your policy or even surrender it for its cash value. These options provide you with additional flexibility and financial security when needed.
When deciding whether life insurance with cash value is right for you, you should first decide whether you want lifelong coverage. If your goal is to secure a death benefit for your family regardless of when you pass away, then cash value life insurance can be an excellent option. However, if you are only looking for short-term coverage, another policy like term life insurance may be the better choice.
Additionally, it's important to consider whether you want a life policy with a cash value component. If you want to build wealth and have the ability to withdraw or borrow from your policy, then cash value life insurance might be right for you.
No matter what type of life insurance policy you need, it's important to compare quotes and policies before making a decision. This way, you can ensure you're getting the coverage that's best for you and your family.
Get Started
Having a plan in place can help protect your loved ones from the unforeseen difficulties that may arise if a main source of income is lost.
There are many ways that one can start planning, including factoring in life insurance for retirement.
Having a plan in place can help protect your loved ones from the unforeseen difficulties that may arise if a main source of income is lost.
There are many ways that one can start planning, including factoring in life insurance for retirement.
1 Investopedia. What Is Cash Value in Life Insurance? Explanation With Example. Updated September 20, 2024. Accessed February 14, 2025. https://www.investopedia.com/terms/c/cash-value-life-insurance.asp.
2 Investopedia. What Is Universal Life (UL) Insurance? Updated November 26, 2024. Accessed February 14, 2025. https://www.investopedia.com/terms/u/universallife.asp.
3 Investopedia. Variable Life Insurance: Definition, Tax Benefits, Vs. Term Life. Updated August 16, 2023. Accessed February 14, 2025. https://www.investopedia.com/terms/v/variablelifeinsurancepolicy.asp.
4 Investopedia. Indexed Universal Life Insurance/ Pros and Cons. Updated February 12, 2024. Accessed February 14, 2025. https://www.investopedia.com/articles/personal-finance/012416/pros-and-cons-indexed-universal-life-insurance.asp.
Coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, coverage is underwritten by American Family Life Assurance Company of New York.
68000 series: In Arkansas, Idaho, Oklahoma & Virginia, ICC1368100, ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68100-A68400. B1000: In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies: ICC18B61JWO & ICC18B61JTO. In Delaware, Policies B61JWO, B61JTO. B60000: In Arkansas, Oklahoma, Pennsylvania, Texas & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400. Q60000: Whole: In Arkansas, Delaware & Oregon, Policy Q60100M. In Idaho Policy Q60100MID. In Oklahoma, Policy Q60100MOK. In Pennsylvania, Policy Q60100MPA. In Texas, Policy Q60100MTX. Term: In Delaware, Policies Q60200M. In Arkansas, Idaho, Oklahoma, Oregon & Texas, Policies ICC18Q60200M.
Aflac Final Expense insurance coverage is underwritten by Tier One Insurance Company, a subsidiary of Aflac Incorporated and is administered by Aetna Life Insurance Company. Tier One Insurance Company is part of the Aflac family of insurers. In California, Tier One Insurance Company does business as Tier One Life Insurance Company (Tier One NAIC 92908). Not available in New York.
In Arkansas, Delaware, Idaho, Oklahoma & Virginia, Policies ICC21-AFLLBL21 and ICC21-AFLRPL21; and Riders ICC21-AFLABR22, ICC21-AFLADB22, and ICC21-AFLCDR22.
Receipt of accelerated death benefits may affect eligibility for public assistance programs. Benefits may also be taxable, and are not expected to receive the same favorable tax treatment as other types of accelerated death benefits that may be available.
Aflac does not offer Universal or Variable Universal life insurance.
Content within this article is provided for general informational purposes and is not provided as tax, legal, health, or financial advice for any person or for any specific situation. Employers, employees, and other individuals should contact their own advisers about their situations. For complete details, including availability and costs of Aflac insurance, please contact your local Aflac agent.
Coverage may not be available in all states including but not limited to DE, ID, NJ, NM, NY, or VA. Benefits/premium rates may vary based on plan selected. Optional riders are available at an additional cost. The policy has limitations and exclusions that may affect benefits payable. Refer to the policy for complete details, limitations, and exclusions. For costs and complete details of the coverage, please contact your local Aflac agent.
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