Cash Value
Life insurance policies are often assigned a cash value. The cash value is an amount that the policy holder can use in loans taken out against the life insurance policy. This is one way that life insurance can benefit the policy holder while they are still living.
One caution about borrowing against the cash value of the life insurance policy is that taking cash out against your life insurance can cause the surrender value of the policy to be reduced, should you die before repaying the loan. Also, your policy is in danger of falling into lapse, which is a situation where there is not value in the policy should you need to cash it in.
Borrowing against the cash value can be valuable in cases where funds are immediately necessary. However, caution should be used not to think of your life insurance as a line of credit. This puts your life insurance investment at risk.
More Glossary Terms Explained here
