Cash Value Law and Legal Definition

Cash value, in the context of insurance, refers to the dollar amount payable upon cancellation of an insurance policy, usually a whole life policy, before it becomes payable upon death or maturity. It is also called cash surrender value or surrender value. Life insurance policies that accumulate a cash value may be used to borrow against, however, the loans must be paid back with interest or the insured's beneficiaries will receive a reduced death benefit. An insured can often borrow against the policy's cash value to pay premiums or use the cash value to provide paid-up insurance.