How it works
Only some policies build one. Whole life, endowment and investment-linked policies (ILPs) have a savings part. Term policies usually don't.
It builds slowly. LIA says cash value only builds after the first few years. MoneySense says a policy may have none in its first three years, because early premiums largely pay distribution costs, commission included.
What it's made of depends on the policy:
- Participating (par): guaranteed values plus bonuses, which aren't guaranteed until the insurer declares them.
- Non-participating (non-par): guaranteed values only, with no bonuses.
- ILP: the value of the units in the sub-funds, so none of it is guaranteed.
A policy loan can be taken against it. The insurer charges interest, and anything unpaid comes off the cash value or the claim.
In the US, NAIC describes cash value as part of permanent policies such as whole life and universal life. It grows without being taxed while it stays in the policy, and it can be borrowed against, but a loan reduces what beneficiaries receive. State law requires whole life policies to carry nonforfeiture values, paid in cash or other insurance if the policy ends early.
The guaranteed and illustrated values are in the policy illustration, and they're the insurer's.
Worked example, with made-up figures: a client has paid S$24,000 into a par whole life policy over 8 years. The illustration shows a guaranteed cash value of S$14,000, and more once bonuses are added. If she surrenders now, she gets the guaranteed value plus the share of declared bonuses the contract allows, less anything she owes. Both are less than the S$24,000 she's paid.
Where it shows up in your week
"What's my policy worth?" usually means its cash value. The CRM keeps what a client asked and what you sent them on their page, so the next review starts from there.
Related terms
Questions advisors ask
Sources
- LIA Singapore, Insurance terms: cash value, surrender value, term insurance, policy loan, read 27 September 2026
- MoneySense, Participating versus non-participating policies: cash values and early surrender, last updated 2 July 2026, read 27 September 2026
- MoneySense, Investment-linked versus participating life insurance policies, last updated 2 July 2026, read 27 September 2026
- MoneySense, Understanding endowment insurance: policy loans, last updated 2 July 2026, read 27 September 2026
- NAIC, Life insurance (US): cash value, loans and nonforfeiture values, last updated 14 November 2025, read 27 September 2026
- NAIC, Life insurance roadmap (US): loans reduce the death benefit, 1 March 2016, read 27 September 2026