What is the cash value in a permanent policy?

• A. The policy's face amount.
• B. The annual premium.
• C. The amount of coverage on a policy.
• D. A cash value component that grows over time and can be borrowed or withdrawn, reducing the death benefit if repaid.

Answer: (D)

The cash value is the savings component inside a permanent policy that builds up over time and is available to the insured during life. It grows, often tax-deferred, and you can access it through policy loans or withdrawals. Any outstanding loan or withdrawal reduces the death benefit payable to beneficiaries, since those funds are drawn from the policy’s cash value. If you repay a loan, the death benefit can return to its original level (to the extent of the repayment). This distinguishes cash value from the policy’s face amount or the ongoing premiums, which are not living benefits.