Cash value is a part of permanent life insurance policies and is a living benefit that the policyholder can use during his or her lifetime.
Such cash value credited to an individual account during the tenure of the policy keeps growing with every payment of premium.
The policyholder may also be able to use the cash value as collateral on a loan, make withdrawals or use it to pay insurance premiums.
The cash value will often be similar or even equal to the reserve to be held by the insurance company for the net obligations from the contract.
Typically surrender charges decrease on an annual schedule until they disappear altogether.